By Samuel Crowther
N< it York Tribu??
European Bureen
iCo-wn-d'?? ,-4-->- NfW V4-'rk T>44l?l?'-4'-e Inc.)
LONDON, Jan. 30. - The second
night after I reached London I
dined with a man who was sup?
posed to be rather well up on Indus?
trial topics. I asked him what the
great factories were doing to make
physically ready for the peace trade.
"Let me give you just one incident."
he answered. "I went into the Mid?
lands seven months ago to see some
old customers who had turned over to
making" munitions. I asked for one of
the partners. He was a lohg time com?
ing in, and he apologized: 'We heads
have our office;- in another part of the
building: now. The munitions business
run? itself with a junior in charge.
We are giving all our time in getting
ready for peace trade.' "
Certainly it was impressive, although
thoroughly un-English, to envisage
these manufacturers withdrawing them?
selves from the world so that their
souls might commune freely with the
spirit of the world that was to come
with peace. It caused me to think what
a marvellous change had come about
in English ways when a group of
healthy Britishers could sit hour after
hour and day after day propounding
and solving questions of world trade.
One might imagine Germans doing that
sort of thing, but not the English. But
here they were planning their trade
campaigns, just as the Germans plotted
to destroy their foes. The "war after
the war'' was on in truth.
.?And England Thinks We
Are Prepared for Peace
Now, that story may be true, but it
has since been given to me in the
strictest confidence by seven other
men. and each of them has told me that
there is no use trying to get at the
facts, for no one will disclose the state
secrets. I cannot say that the tale is
untru:, but I can say that I have
trailed it up hill and down dale and
have yet to find anything at. all which
even points to corroboration. I am
still on the trail, but becoming more
and more convinced that I am follow?
ing a bag of anise seed and not a fox.
So much for that. But what is the
government doing through its several
departments of reconstruction and ex?
tension of foreign trade? Let me here
digress to remark that our idea that
our own governmental departments had
rr?1-.-,-<J
hired all the press agents in the world
is quite unfounded. The English poli?
ticians have nothing to learn from us
? in this respect. They have none of our
crudeness of statement. They do not
come out flat-footed and ingenuous, as
did our aircraft people. They let you
draw your own conclusions. And
whereas I was previously sure that
something very much like the millen
; nium was waiting around an English
corner, I am now equally sure that the
Angel Gabriel has not even looked to
sec if he owns a horn, much less made
ready for a toot.
England is just as prepared for
peace as we are?which is not at all.
And the astonishing side of it all is
that she thinks that we in the United
States are all fit and primed for peace
and she is holding us up as an ex?
ample of what an efficient government
might do in England. Sir John Foster
Fraser, who has just returned from a
tour in the United States, has this to
say:
"Whatever effect this great move?
ment will ultimately have on British
overseas trade, we must admire the en?
thusiasm of the Americans. Of course
there are rivalries between big con?
cerns, but I was tremendously im?
pressed with the prevailing unity tow?
ard making & big, bold effort to secure
commercial supremacy for America.
The spirit was that they were not only
doing something for themselves, but
much for tho glory of America.
"The United States Chambers of
Commerce are much more real and live
things than aie our own. Their manu?
facturers are mach more generous in
throwing money into a common pool to
provide them with information about
the needs of foreign markets. Being
shrewd and practical men, they know
that the war has ??Eorganized the trade
of European countries; they assume it
j will take years before it can become
. stable again; they ara aware how the
; shipping of the Allies has been de
i stroyed by the U-boats. Therefore
they realize this is the hour for them
I to make the jump.
I Reconstruction Ministry
i Merely Spreads Hopes
"Associations of manufacturers have
not only made their plans, but they
are putting them into practice. First,
there is the shipbuilding; then there
are the enlarged plants for increased
production; next there are deputations
Business Men in Great Britain Hear Manv *Tales About Well Formulated Plans in
the United States for Period of Readjustment, Just as Americans Are Told of
English "Programmes," but the Truth Is That Both Nations Are Suffering
From Absentee Administrations, Writer Observes i
! of experts being sent to South Amer-1
ica, to the British dominions, to the :
European countries, to investigate the
markets and to report back. It
should be understood that this is not ;
haphazard or fragmentary, but is a
movement with the whole commercial
and financial America behind it."
I have heard that same sort of
speech delivered no end of times in \
America, with the single exception that
there it is the British manufacturers
who are wide awake and stirring!
A?; ?i matter of fact England is not
at all prepared for peace; she is no
more and possibly somewhat less pre?
pared than are we and ihe number of
firms who are individually ready is
scarcely as great as the number of
our own who arc ready. And as far as
the two governments are concerned
they are at a standoff?neither has
dene anything to speak of. The Eng?
lish have the initial disadvantage of
having through the Ministry of Recon?
struction and a dozen other agencies
promised to do something. Those tales
which have come to us.of great doings
are tales of hopes and not of facts;
perhaps the hopes are well founded?
perhaps they are not. We have taken
England at the time when the
successes of the troops abroad inflamed
the martial spirit of the men of com?
merce, and they, too, thought they
would conquer the world. They have
taken us at our own estimate, when our
troop3 were fighting so splendidly. ?sTow
Loth sides are seeing that there are a
number of practical difficulties stand?
ing in the way of commercial and in?
dustrial perfection, but each considers,
for the time being, that these diffi?
culties are purely personal and that
the other fellow has no difficulties at
all. Unfamiliarity is the enchantress
which has made our commercial people
afraid of England and England afraid
of us. That is all there is to the actual
readiness. And the larger men on both
sides of the Atlantic know it.
This is not to say that England is
not verv strontr in the same wav that
Reconstruction?and Beyond
War Has Added Many New Aspects to the Woman Prob?
lem, Leaving Spinsters to Fight for Living in Debt-Rid?
den World, Economist Says; Immigration Not Harmful
By H. J. Davenport
Projtuor of Economics in Cornell
University
THE effect of war-debt taxes will
be to make living conditions for
'.he laboring masses of Europe less
tolerable, with the more marked effects
is monetary policies may attach great- '
t-r burdens to the debts through the
?owering of general prices. It is in
'nis aspect that the war must tend to !
rromote emigration from Europe to
the countries of relatively less un
r*r-crr..-::ng conditions?to the United
?'.f.c, for ? nir.p'.e, where the war
turder. - lomparatively light; to
Souln Al ? t rere there are none.
Kuropr, ? true, will have plenty of
"orit t0 ?'? ? oor countries have,
***'<>?? laborer is to be able
'? 1|V* >? ? but it will not be work
~;,J*r '??? better opportunities'
Pr?': e product will go in
waller share to the producers of it.
1 ?gar?! it, ?? refore, as clear that the
??borers of Europe will emigrate in
'ncreasing r.umhers if only they arc
?Jtrmitted to get away at all.
But shall wc admit them? Shall we
n*?d them ? Can we make places for
?aem? I sce no appreciable economic
h?rm in their coming, and for the
Population already here?not the
?lightest good. There will, however,
** great good to those that come. But '
our level 0f wages? It is an error to rea
?on directly from more laborers to lower ;
w?g?s or to higher profits. If there ;
?? more people to produce there are \
m?i"e people to consume. With larger
Cumbers there is more work to be done, i
**T*ic human family occupied In pro- I
?Being for ,tsclf is larger."
*?w Supplies of Labor
Uke New Inventorie?
Production can, then, suffer rela
t;v?ly to population the per capita in- j
^fiie diminiyh and therefore the aver
*?* welfare be kwer only as popula
"*n tend? to overcrowd the natural
?WWoniWe?, to subdivide unfavorably
%H *dvant**e" ol tnc environment.
^raethir.g of thin harm almost inevi
b'y goei v/ith immigration for those
?rea/iy here but it is corn moi. 1 y of
'"? slight?)tt importune...
*?? do.-? , m migrant labor make for ,
'*? Profit?. So long as the employers
tj* *'?U<j1 ac':,??"1 l" ,l ,h,,>' compete
* l?,r*'ns 0U? of il th'f wages up
,, tfl*; ?Hin? pri?es?, down. New sup
* m (?bor fe. - /.imitar to new inven
MOt!?
tk* ' '*''*' KHUin go only to
^ *"*' *fid. |ri the long rni; therft is no :
i*t^Ul " ?**?????? ?? '??? ''he new
^_" ***? "'hat It i? eompet?tively I
j^' *? f'??r?y a? the old labor get? ;
^ er 8* Und or machiner y or hors??
0**n K-t ,t it is only the ?pecial
^ n ti labor directly ?ubjected to I
*** ?ompetition tbat can ?er?ously '
suffer. Other laborers may even be i
benefited.
And now we are prepared for an
aspect of the post-war problem that is
most serious and most tragic. The
millions of dead and invalided in Eu?
rope are not merely a subtraction from
the total valid population -not merely
from the productive forces ^iot mere?
ly finally from the man power for pro?
duction; they are subtractions from
the number of future husbands for the
young women and of future fathers
for the next generation of children.
Surplus of Marriageable
Women Over Men
Europe, therefore, and measurably
also America, has before it the series
of problems that must attend a dis?
parity of numbers between the sexes,
and that especially attends a deficit of
men. And, worse still, this surplus is a
surplus of marriageable women over
marriageable men. Society never runs
wholesomely or safely on this basis.
But that is no part of our present
question. Xor again are we concerned
for present purposes with the fact that
because of the restricted birth rate of
the next ten years there must be twen?
ty or thirty years hence a diminished
supply of maturing men for workers
and of maturing women for mothers.
During the period of rearing children
arc rather a liability in the home than
an asset. The proximate burdens ol
the world will be less instead of
more by the lack of children to be
cared for. Our problem is merely what
must Europe immediately do with its
million? of girls maturing into war
spinsters.
.Surely they will have to work. And
certainly there will be need for their
work. But it will be work under the
stress of a new and dire necessity
not merely for self-maintenance, but
to help pay taxes for a war debt, possi?
bly to be doubled in burden, and to
support the war invalids work under
even worse conditions than ever home?
less, self-dependent, unmated, childles4
and hopeless women have earlier
known.
But Will these women he allowed
even the scant good fortune of a labo
rious self-maintenance ? There is, a'
least, no tradition In Europe thai
women may not work, no labor poli'
cies and programmes that they shal
not. Nevertheless the life of womei
m Europe is to be increasingly mor<
crue! than for the men. Emigratioi
will, therefore, especially appeal to lb?
women only that, emigration is itsel:
somewhat of a luxury. It takes money
HuvingM. But Europe, no matter hov
rigorous in holding its men, will let jti
surplus women go; possibly it may as
?int them to go. ,
The Part of Women
In the (?reat War
But in r any parts of America th?
women somewhat outnumbered th
irifii even before the war. What thel
I? to be done with th? new Immigrants
Are they to be allowed to work? Hus?
bands are lacking even for the women
that we already have. Fewer mar?
riages and later marriages art? increas?
ingly the American rule. Our woman
problem was already serious enough.
The praise that has been lavished on '
the women of America for the part |
they took in the winning of the war
strikes me, 1 confess, as grotesque
nonsense. Instead, I take the degree
of their non-participation to have been
a national blunder and an institutional ?
reproach. The German women and
the French women always did work, j
and during the war theyr worked more :
and harder. The English women count- i
ed for much ?ess and yet for much.|
in the great emergency. Our women j
did relatively little. Out of the thirty
seven millions of males in America be?
fore the war of so-called working age
above ten years thirty millions were
breadwinners; out of the thirty-four
and one-half millions of females, eight j
millions. There were, then, something
like twenty-six millions of emergency
reserves in this great reservoir of
leisured or semi-leisured women. Pre?
cise data are unavailable to determine
how many women out of these twenty
six millions were actually set newly
at work; but till toward the end of the
war not much more was accomplished
than a shift from other occupations?
domestic service, etc.- into the war in?
dustries. Probably for the average of
the war period the net increase in the
number of women workers fell short of
tne million.
Calls Wives Items
Of Furnishings
In a long pull of resources and of
endurance the economic futility of
American women might easily, as I be?
lieve, have lost us the war. I impute
no individual fault anywhere. Whether
and how far the women would have
filled the places had they been opened
no one can know. But it. was not the
less a strange fatuity of futile blun?
dering that actually the places were
not opened. The enormous reservoir
of productive power went almost un?
tapped.
But why?
The answer is that, especially in
America, the factory system has dis?
placed the old domestic industry.
When the work was in the home the
women did it, together with the men.
Now, however, the work has left the
home, But the established social tra?
dition requires that the women still re?
main at home, despite the fact that
nothing in the way of really serious
work is left to be done there. The
woman has not followed her job and
has lost it. Labor union policies also
oppose her entry into the factory -
whither the work has gone?even
though she may have no home to re?
main In, Both restrained and repulsed,
the women of America have tended to
abdicate their economic, functions nnd
to sink or rise into economic do?
pendency. This divorce from economic
activity goes, indeed, ao'/ar that if the
she has always been strong. Far from |
being bled white, she is in many re?
spects stronger to-day then ever be?
fore. Especially is she strong finan?
cially? aside from the matter of infla- j
tion. She has no need of a helping i
hand and asks for none outside of cer- |
tain raw materials. But no industrial j
and social reconstruction has come I
about; there has been no national re- j
vamping except for war. Those who i
were charged with making over the i
country spent some months past in
electioneering, and then went to Paris.
England is in like case with the United ,
States in that she is being governed j
in an absentee sort of way, and no one
in authority seems to have decided upon j
anything. And the business people of i
the country are asking that something
bo done, and right quickly, to enable a i
return to fairly normal conditions. To- j
day nothing in England is normal, Some I
want to return to the old normal; ;
others ask for a new normal--recon?
struction. And in the reconstruction,
so far as plans are concerned, free play
has been given to every idea, until to?
day finds England divided between
those who hope for and those who fear J
a new era.
Want to Make New
World a Better Place
The Ministry of Reconstruction, until
the elections presided over by Dr. Addi
son, but now in the hands of a much
stronger man -Sir Auckland Gtddes?
is purely an advisory body, and has
something of the position of our Ad?
visory Board of the Council of National
Defence. It can suggest anything it
likes, but it has not the slightest power
to put any suggestion in force. It has
made many recommendations, and the
general policy as stated by Dr. Addi
son is:
"Thus the idea of reconstruction, of
a simple return to pre-war conditions,
has gradually been supplanted by the
larger and worthier Idea of a better
world after the war. The experience
through which the country has passed
husband's income will in any way per?
mit the wife must have help in doing
the little that there is still left in the
home to do. It becomes even more rig?
orously a point of honor with the hus?
band that the wife be little more than
an item of decorative furnishing.
But the children, that require atten?
tion and time and care? They grow
fewer and fewer. The European wom?
en rear two or threefold as many, with
all their work to do. The most lei?
surely of our women are the most in?
fertile of our women; th--? more time
and strength they have to spare the
less they spare for the essential busi?
ness of the home-the ultimata bio?
logical meaning of marriage. The chil?
dren are in reverse ratio to the size of
the house. And still the home grows
more and more expensive, is increas?
ingly a luxury, as the children are
growing fewer. But as a luxury the
home becomes neither an expedient
nor a practical thing excepting for
those who are well to do enough to
afford luxuries. It is the economic
futility of the home that increasingly
explains and imposes the increasing
celibacy in American life. Without
economic functions in the home and
without access to economic functions
outside the women become fewer and
fewer that can marry into homes.
More and more they must shift for
themselves, by virtue of the very fact
that if they marry some one else must
undertake to shift for them. So far
from longer* being helpmates, economic
assets, they have become liabilities. It
is, then, the American home that more
and more is making American men and
women homeless. Our problem of the
economic status of women is funda?
mentally, therefore, the problem of the
non-economic home.
A Solution of the
Servant Prohlem Seen
How, then, shall America set about
it to make room for the new women
immigrant?? Even those of our women
that found and accepted work during
the stress of war are now being dis?
charged - a personal injustice and an
institutional perversity past all belief.
There is, then, in truth, some amel?
ioration in prospect for the dearth of
domestic service?the housemaid prob?
lem. The unduly expensive home may
now absorb on cheaper terms more of
the human labor of which it has al?
ready become so prodigally wasteful.
The positions of domestic service that
American-bred girls have long dis?
dained the immigrant girls will accept.
And this is so far good granted that
the home should have their labor-and
granted that there is elsewhere no room
for it. But still the immigrant women
must make more acute a general sit?
uation that is already Sufficiently grave.
The labor union protest against the
labor of women rests on an economic
fallacy. .National well-being or the
well-being of the laboring classes is
not enhanced by the existence of non
producers. Whoever does not live by
title of his own product lives out of
the product of some one else. Para?
sites have to be parasites on some
one have to be maintained at others'
cost. Even if there were harm from
the fact that any one works to support
himself, there must be more harm in
living without work. But to imagine
that any individual is the worse off
because others are at work supporting
themselves is about as silly as the con?
trasted error of asserting that the na?
tion as a whole or somebody in partic?
ular is, say, $2,000 the poorer by each
death that befalls from intemperance
has enlarged its sense of what is possi- :
ble, and at the same time quickened its
sense of what is fair and right. The
choice by the government and Parlia?
ment of the word 'reconstruction' in
preference to the more colorless terms
adopted elsewhere testifies to the fact
that what the country feels to be need?
ed, if we are to learn the full lesson
of war, is not simply a scheme designed
to bring life back into its pre-war chan?
nels, but a policy conceived with a
more permanent object in view and in
harmony with the spirit which the war
has evoked in all sections of the com?
munity.
"There aro thus two sides to the
work of reconstruction._ It is con?
cerned both with the questions which
will nrise in the natural course in this
and every other country, when the
war ends and the nation is switched
back into the activities of peace time;
and it has to give shape and satisfac?
tion to the strong feeling which has
arisen in all sections of the community
among men and women of the most ;
widely different opinions and outlook, '?
that there is very much-to be nshemed
of when we look back to the conditions :
of July, 1914, and that, out of justice ]
to the living and out of reverence for
the dead, we are called to rebuild the
national life on a better and more en?
during foundation."
To this end a multitude of commit?
tees have been formed to deal with
every possible event; some of them
have reported and some have not, and
there has as yet been no attempt to
coordinate them. The most important
; ?the key committee?is that known as
; the Whitely committee on industrial
: relationr,, for it is labor that will make
] or break the country, and it is to-day
in n chaotic state.
Wages during the war have been
\ fixed by the government, but the rates
; will expire in May, and pledges have
also been given that the numerous
', union regulations suspended for the
? war will be restored. That they can
; be so restored is granted to be an im
! possibility.
| or tuberculosis or plague or wa.r.
| Doubtless the notion has some mean
i ing for certain purposes for example,
I in terms of power for national aggres
i fcion or defence in the making of war.
But, taken in terms of individual in?
terest and individual welfare, the pen?
alties of death are with the man that
dies the loss of income a loss to him
of his income, not a loss to you or to
me. Even the parents that have reared
him are not poorer in pocket by his
lieath. His earnings he, and not they,
would have had and spent.
Population Growth
Harmful to ?N'o One
In any case, no one who perceives a
financial loss from the deaths of those
that die will easily accept the view that
! immigration or higher birth rates can
hide great harm. If, as Artemus Ward
asserted, "it would have been $10 in
Jeff Davis's pocket if he had never been
born." neither you nor I need thereby
have been any the richer or the poorer.
The truth ?3 that there is little in it
either way for those who, having been
born and remaining in life, see one
generation in gradual disappearance
: and another slowly moving up to take
its place, nor does a change in po?
litical boundaries make redistribu?
tions of wealth. Each man's earning
! power is not the less his own. The
Philippines are not impoverished by
"belonging" to America. So far as I
can see, the growth of the population
of a state benefits hq one but the land?
lords and in no appreciable degree
hurts any one else.
The fundamental principle in the en
tiro case is that wages are derivative
; from product. If the women work, their
wages will merely represent the in?
creased product that comes from their
work. Xo family income is greater by
the fact that the daughter-any more
than the son- is not permitted to work.
If women are not herded into a few
industries, congesting them relatively?
if all occupations are open to the wom
I en?the wages of men in the large need
not suffer. Society does not prosper
by having little work done. But it is
hard on the out-of-works and hard on
1 those that furnish the maintenance.
Workers in any particuar trade may
prosper by being relatively few -
harmed by the few workers in all other
trades-but neither helped nor harmed
by many workers in all trades.
Thus, to prevent women from work?
ing can be to the advantage of no one,
: but to the direct and cruel loss of the
excluded women?to the aggregate loss
of society also, since, till the women
; have starved to death, they must count
as human beings and be kept alive
as a charge on others' production.
Women's Chance Among
Meagre Opportunities
Inevitably, therefore, the war has
added new aspects to the woman prob?
lem, not merely because of the men
that are dead, the home fires that will
i not be lighted, the children that will
not be born, but also because of the
millions of women that, spinster
! doomed, must now enter the struggle
' for a separate maintenance. But it is
not entirely inevitable?in some pnrt
| it is merely stupid and cruel that this
? struggle the women now have to face
in a world that has never more than
grudgingly and partially shared its
opportunities with them, ana that now,
debt ridden, has only meagre oppor?
tunities to share.
(Note Thin in the last of a aeries
of article? hy Professor Davenport?
financial Editor.),
The Whitely committee suggested
that in each industry there should be
set up a national council composed of
representatives of trades unions and
cf employer organizations; below the ?
national council are to be joint district
councils. The first nationally and the
second locally would settle all ques?
tions in the industry. The thought of
the report seems to be that these
bodies should concern themselves
largely with the labor end, but there
are .those who take it that the most
intimate practices of the employers
would also come within the jurisdiction
- that is, if the planning of any cer?
tain employer were bad, then the coun?
cil might step in and change it. And
finally the report. though rather
vaguely, takes the matter of self
government right into the shop itself
by the joint workshop committee. This
committee would practically be a new
board of directors, for whatever the
corporation directors decided could
not he carried into effect without the
assent of the shop organization. In
effect, the report recommends a kind1
of industrial democracy within each
industry.
Self-Suilicien?py Idea
Is Not Yet Realized
1 he difficulties in the way are many
The employers are not well organized
and at the same time they see the vas
| possibilities for trouble where trade
; must work together, as, say, in build
ing, where carpenters, iron worker:
' bricklayers and half a dozen other
\ might find their ideals and principle
j conflicting upon the same buildinj
i The workers oppose the plan to son"
? extent as possibly affecting the solida
it y of trade unionism and also as pos
i poning the ownership of industry 1
the workers, and there are not a fe
; who want complete ownership. At
! finally labor is badly split up on poli
j ical lines and has not yet decided wh
it wants there are more kinds of lab
politicians than one can count on h
hands. ?,
In the mean time the organizad
of the couricils is hanging fire. Whether
the plan will ever be adopted is a mat?
ter i f great doubt. Until labor is set?
tled nothing can be done, but coupled
with the labor arrangement is a gigan?
tic scheme of housing. It is stated
that there is a shortage of about 400,
000 workers' houses in England and
Wales and nearly 300,000 in Scotland.
London, Liverpool, and. in fact, all the
large cities contain many unsanitary
dwellings and considerable slum areas.
During the war the government, aiding
the local authorities, has put Mp many
substantial dwellings, and it is now
proposed, both in the interest of the
national health and because it is held
to be the duty of the state, to carry?
forward the plan until every worker
has a decent place in which to live and
all slums are wiped out.
Another direction taken by a group
of fifteen committees, and which
aroused some consternation in other
countries, was the announced intention
to make Great Britain self-contained
and to import nothing but foodstuffs
and raw materials. It was a great
shock to the people here to lind that
many of their everyday articles had
come from Germany. For instance, it
was found that most of the iron and
brass ware had come from Germany,
likewise paper making machinery;
that agricultural machinery had come
from the United States. Sweden,
Belgium, and so on. Therefore it was
decided to make these and many other
articles after the war, and bureaus
were set up to give advice and selling
fields in hundreds of articles. Mate?
rials were released for experimental
purposes, but, so far as I can learn,
really very little has been done in the
country as a whole. After I have been
out among the factories I shall know
more on this point, but the hitch now
seems to be to get capital to finance
new and untried lines. Then there arc
also many questions about financing
new industries, such as the coal tai
dyes.
Finally England was going to nation
alize its foreign trade, and to that en<
the Board of Trade appointed an in
formation department which is expect
ed to examine and report, upon all for
eign markets and to keep trade scout:
throughout the world. A further de
velopment was to market product
through government agents and in vas
cartel fashion.
The point to bear in mind about mos
of these schemes is that they involved
a control by the government; England
is presently enmeshed in probably the
largest bureaucracy the world has ever
known, and the people in charge are
immensely fond of the power that they
exercise; they do not want to give it
up, and spend a considerable part of
their time devising attractive schemes
for not giving it up. Most of the plans
for reconstruction, I can say with en?
tire confidence, are but efforts to keep
jobs intact!
Says Government
Must Stop Building Ships
But the people feel somewhat differ?
ently about control. I have yet to hear
a single person not an officeholder
speak well of any control. They all
pray for the day when the bureaus
which control every conceivable thing
will be abolished. They do not want
the Minister of Munitions to direct
peace manufacturing as one of the
numerous incumbents of that office vol?
unteered to do and they do not want
the minister of anything else to do
more tiian stick to his war muttons and
hie himself away just as soon as the
war job is done.
There has been already and there
will be a deal more of what might he
called "reconstruction" in England,
but it is of the individual mid not of
the collective type, and England prom?
ises in many ways to be stronger than
ever before. All of this ; shall go into
in later articles, but I can now say that
there will be no Germanization of
British finance or industry. The Eng
' lishman has not the slightest intention
of letting politicians experiment with
his money or of goose-stepping to com?
mand.
The exact revamping of industry will
depend largely upon what labor will do
when its members are either demob?
ilized or return from the vacations
! which they are now taking at 25 shill?
ings and upward a week on the employ
: ment allowances. In the interim the
business man, having finished his
I Christmas holidays, is directing the
i energy which he used in slaying Ger
j mans toward the slaying of bureau?
crats.
It would make a far better story tu
toll of a new England working as a
< vast machine of deadly accuracy for
the peace conquest of the world bur
that, would only be to put on paper the
I day dreams of the officeholders.
ni all Corporations Protected
Aeains? Excessive Taxation
i*
New Revenue Bi?l Limits the Amount Collectible on Incomes
From Moderate Capital investments?Changes Made in
System Cor Computing War Profits ("redits
By Morris F. Frey
! Tax Consultant, Guaranty Trust Com?
pany of Neiv York
THE new revenue bill, which im -
poses the war-profits and exces:;
profits tax, provides in effect for
an alternative tax on the income of
corporations based either upon the pre?
war profits or invested capital of a
corporation, whichever is higher. The
text of the bill as passed by the Blouse
stated the tax in the form of alterna?
tive assessments, but in the Senate,-in |
ordor to overcome legal objections, the
bill was amended to impose a single
assessment. As provided in the Senate
i bill, the rates of tax are as follows:
First Bracke' Thirty per cent of tiie
net income (in excess of the excess-profits
credit) and not. ?n excess of HO per cent i
of th? invested capita*!.
Second Bracket -Sixty-five per rent of
the not income in excess of L'O per cent
of invested capital.
Third Bracket The amount by which 80
per cent of the net income (in excess of
the war-profits credit i exceeds the sum of
the taxes imposed under the first and
second brackets. iScc. '?01).
The tax proposed for 1919 is em- !
braced in the first two brackets, but
the rate-' are reduced to '_0 per cent
and 10 per cent respectively. The 80 i
per cent applies in 1919 only to cor?
porations which derive net income in '
j '
excess of S10.000 from government con
i tracts made between April 6, 1917, and
November 11, IP IS. In such cases the
tax shall be the sum of the following:
i 1 i Such u portion of the tax computed
?it the rute specified for ll'iS as the part
of the net income attributable to such
government contract or contracts bears to
the entire net income, and
i "i Such a portion of the tax computed
at. the rate specified for 1919 and there?
after as the part of the net income not
attributable to such ?government contract
or contracts bears to the entire net income.
As applied to a specific case the war
profits and excess-profits tax for 1918
of a corporation is computed as fol
; lows:
Pre-war Taxable
period. ?rear.
Net income $100,000 $250.000
Invested capital 500,000 700,000
Excess-profits credit $59.000
War-profits credit 123,000
Computation of Tux
Tax.
First bracket 30--. of
($1-10,000 less $59.0001 $81.000 $24,300
Second bracket G5?7o of 110.000 71,500
Total tax under first and
second brackets $95,800
Third bracket SiK4- of
($250,000 leas $123,000) $127,000 $101.600
Less tax under first and
second bracket. $95,800
Difference $5.800
Total tax under first, sec
ond and third brackets $101.600
Income tax on $110,400
at 12 per cent $17.568
Total tax $119,163
Two entirely distinct and separate
deductions are to be used in computing
the tax; first, the excess-profits credit
referred to in the first bracket, and
second, the war-profits credit referred
to in the third bracket.
In the foregoing example the excess
profits credit is 8 per cent of the in?
vested capital of $700,000, plus $3,000,
amounting to $59,000. The war-profits
credit is the sum of
(a) The average income o? ?ic jire-wat
period consisting; of the years Ifll, 1912
and 1913, or $100,000, plus
(b) 1" per centum of $200,000 (the dif?
ference between $500,000, the average in?
vested capital for the pre-war period, and
$700,000, the,invested capital for the tax?
able year), or $20,000, and
(c) The specific exemption of $3,000,
amounting to $123,1.
If, in the foregoing ease, the c?pital
for the taxable year should have been
lower than the capital for the pre-war
period the war"-proiits credit would
have to bo reduced by 10 per cent of
the amount of the decrease in capital.
An important change was made in
the House bill by the Senate, in con?
nection with the change of the amount
of the credit due to an increase or
decrease of capital in the taxable year.
The House bill provided that the aver?
age net income of the corporation for
the pre-war period should be increased
or decreased, as the case might be, by
10 per cent of the invested capital,
added or withdrawn since the clos? ol
the pre-war period. This provision was
contrary to the fundamental principle;
of a tax based on war-profits, inasmucl
as the invested capital on a particulai
day, that is, the end of the pre-wai
period, would determine the amount o
the deduction, whereas the amount o
income which was being reduced or in
created was based on the average fo
the pre-war period. The Senate, conse
quently, changed the bii! to provid
that the average net income for th
pre-war period should be increased o
diminished by 10 per cent of the dif
ference between the average invest?
capital for the pre-war period and th
invested capital for the taxable year.
Credits Computed
in Special Cases
The Senate biil provides furtiier fo
the computation of the credit in tw
special cases:
ill If the corpornticn had no net income
for the pre-war period or if the amoun'
computed as provided above without tht
specific exemption of $3,000 is less thar
in per centum of its invested capital loi
the taxable year, and
(2) If the corporation was not in exist
ence during the whole of at. irait one ca?
endar year during the pre-war period.
In the first cuse the credit is tr
sum of an amount, equal to 10 per cei
of the invested capita! for the taxab
year and $3,000, tn the second cai
the credit is the sum of $o,000 and t
amount ? <iual to the same percenta;
of the invested capital of the taxpay?
for the taxable ycur as the ave raj
percentage of net income to invest?
capital for the pre-war period of co
porationa engaged in trade or businc
of the same general class as that co
ducted by the taxpayer. Such amoui
however, in no case is to )??' less th:
10 per cent of the invested capital
the taxpayer for the taxabh year. I
assessment in the latter instance
dependent upon the determination,
the Commissioner of Internal R?vent
of the percentage of repr?sent?t i
corporations. If such determinate
however, is not made within thii
days prior to the time fixed for fili
return the credit is to be computed
the basis of 10 per cent of the invest
capital of the corporation for the Ti
able year anil an adjustment will
made when the average percentage 1
been determined by the department.
In the methods prescribed for 1
computation of the war-profits ere
it is apparent that a corporation i
in existence during the pro-war per
ig treated more favorably than a c
poration which has increased its capi
since the pre-war period or a corpo :i
tion which was in existence during the
pre-war period but had no ?n?- >me, o??
an abnormally low income during such
period. In such cases the increase of
the credit due to increase of capital is
limited to I') per cent, or where there is
no income, or abnormally lo.v ?ncome,
the credit is limited to 10 percent ci the
invested capital. In the case of a cor?
poration not in existence during the
pre-war period, however. :h?3 exemption
shall not be less than 10 per cent and
may be higher than 10 per cent, pro?
vided the percentage of representative
corporations is higher than 10 per cent.
Limitation Important
to Small Corporations
The new bill protects small corpora?
tions from excessive assessments by
placing a limitation on the amount of
tax which may beT collected. This limi?
tation provides that the tax for 191H
shall, in no case, exceed 30 per cent of
the not. income in excess of $3,000 and
not in execs of $20,000, plus 80 pel
cent of the net income in exc?s.-; of
$20,000. For the year 1919 and there?
after such tax snail not exceed the
.sum of 20 per cent of the net inc?>me
in excess of S3.000 &nd not in excess of
$20,000, plus 40 per cent of the net
income in excess of $20,000. This limi?
tation is of special Importance to cor?
porations having a small income and
' small invested capita!. For example, a
? Corporation with net income for the
taxable year of $20,000, pre-v/ar :n-'
income of S3,400 and invested capital of
$."?,000 for both the pre-war period and
taxable year, is subject to tax
computed in the ordinary manner as
, follows :
Net income $20,000
Credit
Net income pre-war period $3,400
Specific income $8,000 6.?W0
Income taxable at 80% $13,600
War-profits and excess-profits tax 10,780
The '.imitation, however, confines this tax
to 30 ; er cent of $17,000, or $5,100.
A special method of assessment is
also made applicable to a corporation
which derives income both from busi?
ness with invested capital and from a
business without infested capital, the
net income of which latter business
con-, titutcs not less than 30 per cent
of the entire net income of such eor
; poraf ?on and which, if transacted alone,
would class it as a personal service
corporation. In such cases the tax
upon the net income from the business
with invested capital is computed sep?
arately, and the tax upon the net in?
come of the other business is the same
percentage thereof as the tax upo i the
income fiom the business with invested
capital is of the ?ncome from such busi
? ?ithuut invested capital. E'ir ex
ample, if the corporation derive:
$30,000 per year from business with
invested capital, upon which the \tat
profits and excess-prolits tax separate!}
computed amounts to $12,000, and ii
addition thereto derives $50,00J income
from business in which capital is no'
employed, the tax on such $50,001
, would be at the rate of 10 per cen'
I or the same percentage as $12.000 i:
; of $30,000. The tax thus computei
shall not be less than 20 per cent o
the net income, unless the tax com
I'uted regularly on the entire incom?
| and invested capital is less than 2'
pe? cent.
The income from gold mining is e\
empt from war-excess profits tax, bu
j any oth?*r income accruing to a corpo
| ration so engaged is taxable. The ta
; on profits from the sale of mines o
; oil or gat? wells, the principal value o
: which was demonstrated by prospect in
and exploration or discovery work h
j the taxpayer, is also limited to 20 pr
j cent, of the selling price of the prof
1 erty.
...