NEW PATRIOTISM FOR OLD
Pinchot, Amos
New Patriotism For Old A Stirring Letter Has Been Sent To Claude Kitchin, Chairman Of The Ways And Means Committee Of The House, Urging A Higher Tax On War Profiteers By AMOS PINCHOT Amos Pinchot...
...They should be as unequal as are the means of the contributors...
...Wilson was right...
...For the work of making a complete tabulation was too large and too expensive for me to undertake...
...The older wish, however—that of improving one's economic status by every means that is not prohibited by statute or in open violation of common decency—has been in existence a long time...
...We appeared before your Committee and asked that war expenses should be divided between bonds and taxes on a fifty-fifty basis...
...Parliament would have to resort to something beyond taxation —that is to say, to a direct levy on wealth...
...They are, for the present, in Europe fighting our battles, and consequently they are unable to speak foi themselves...
...sents, of course, only a small part of the total excess profits of American business available for taxation...
...He replied, and I quote only from memory, "We are wondering whether you people back home are doing your part...
...It is strong with the strength of habit rid vital in proportion to its very human rnott-"'s.tion of acquiring that which gives immunity •.rom the common lot...
...indeed, to make the war a democratic force which will destroy special privilege throughout the world is the American people's dearest purpose in participating in it...
...Wilson was right...
...Such an ap-peal, of course, would not obviate the necessity of a drastic revenue bill, but it would, I think, give the war a stronger moral support in business circles, clarify the_ atmosphere as to the obligations of wealth in war time, and make proper revenue legislation a comparatively easy matter...
...And, in some instances, officers of these organizations, who believed themselves to be, and no doubt were, moved by friendly feelings, came to us secretly and advised us to resign in order to escape expulsion...
...For this reason, they are today far better able to pay an 80% excess profits tax than the English companies...
...Out of the great revenue bills, that now come before you, will emerge, in no unreal sense, the measure of the democracy that America, at the dawn of peace, will offer to those who have fought and toiled through the long night of war...
...Speeches were editorially commented on, though never made, in which we were alleged to have favored a peace which would leave Germany in possession of northern France...
...As you may remember, a year ago last spring, a committee was formed in New York City to urge income and excess profits taxes on something like the English scale...
...this time, when so many people are suffering from the lack of good nourishing food and so many others are dying, or being wounded in the service of their countries, it should not arouse resentment in the well-to-do man, if he finds he is being taxed to the limit of his income, and that a part of his capital is drafted aa weU...
...What is the distinction between British and American business that makes necessary a special coddling of American war profiting concerns ? Show Big Earnings...
...most of them had been fighting for democracy for years before we entered the war...
...It is nothing more or less than a necessary war measure of proved practicability, based on the experience of England, on sheer common justice and plain «oramon sense...
...Most of these men are poor, that is, they have no "capital" and no income surplus...
...In various social organizations movements were initiated to force our resignations...
...But it seems a little too much that the public should have to pay fifteen hundred million dollars a year to less than three hundred companies, in order to keep them on the job, and key them to the necessary degree of patriotic activity...
...However, before discussing this proposal more widely, let me say, at this point, that I do not want to be understood as implying that all corporations showa in the lists as having made big war profits are consciously "profiteers," or that all the men who control them are wilfully disloyal, in that they have sanctioned huge earnings at a time when war conditions give the government and public the right to buy necessaries at the lowest price consistent with sound business...
...When they do, they will quit worrying about how much excess profits they will be allowed to keep, and devote themselves exclusively to the project of defeating the German war power...
...The average profiteer unquestionably feels the call of patriotism...
...and that we should go, (as we certainly can without unduly disturbing business) at least as far as England in this direction...
...Most of these men are poor, that is, they have no "capital" and no income surplus...
...Kitchin, should they not do so...
...NEEDLESS to say, such a resolution would have to be accompanied by some kind of enabling legislation, especially in order to permit the government to receive voluntary contributions, or else a nominal consideration would have to be established similar to the one dollar salary paid to men who are today donating their services to the government for war work...
...2) to pay your employes a fair family living wage, and (3) to set aside a proper sum with which to amortize expenditures incurred in plant extensions, etc., which are likely to be worthless after the war is over...
...It would, at all events, be a sum more than double that which you now propose...
...To do this is not in any sense "an attack" on wealth, it is not trying to punish anybody either...
...For while the few dollars he paid would make him cut down on sheer necessities, my contribution would only cause for me and my family, a lessened consumption of a few pleasant but non-essential luxuries...
...They believe that, if this war for freedom is truly to result in freedom, it must be fought by the civilian at home as well as by the soldier at the front...
...The profiteer may know mentally, because a few unbusinesslike persons huve told him so, that he ought not to want to .1 ke money out of the war...
...And it is also no secret that the majority of the leaders refused to accede to the President's suggestion-just why the public would naturally like to know...
...His wish to be patriotic, in the sense demanded of good wartime citizenship, is newly formed and comparatively immature...
...IHAVE tabulated the earnings of two hundred and eighty-seven of our more important companies from 1911 up to and through the last fiscal year (1917...
...In fact they put themselves in an excellent position to pay taxes, most of them •writing off, as they went along, the cost of new plants built especially for war business...
...But at all events such a plan would furnish a much fairer adjustment than is now being made by income and excess profits taxes, and by government price fixing, where a uniform price for both low and high cost producers is tending to drive the small concern out of business and establish a monopoly for the large combination...
...And certainly, at...
...But our proposals were promptly labelled by profiteer-controlled papers as "attempts to make the war unpopular," as "thinly veiled pro-German propaganda," etc...
...For by taxation, more than by any other function of society, is determined whether the wealth, that is, the power in a modern nation, shall be equitably divided among the people, or concentrated in the hands of a master class...
...England, though proverbially conservative in matters of finance, has taken a position considerably more advanced than that of the President, the British Chancellor of the Exchequer recently predicting that, in order to finance the war...
...Later on, they started an organized movement against the packer and miller profiteers' of the north and central west...
...otic, although its members bought liberty bonds, enlisted in the army and navy far above the average, and offered to sell their grain and stock at a profit so small that the packers and millers were horrified at the idea of themselves being obliged to conform to such low rates of return, they were accused of all kinds of iniquity...
...In contributing hundreds of thousands of dollars, I would really be sacrificing nothing in comparison to my friend, who would be giving some of the health, comfort, and opportunity of his family with every dollar he paid...
...Our loyalty to America needed no endorsement...
...In short, he is torn by two conflicting and perfectly irreconcilable desires...
...and maximum industrial production is impossible while labor feels itself exploited by employers, whose immense profits frankly invite the wage earner to strike...
...Profiteer Tactics...
...We should therefore make it a point of honor to take care of their interests during their absence by seeing to it that, when they return, they and their families will not find themselves embarrassed any more than is absolutely necessary by a great bonded debt, to be paid as bonded debts always have been, out of the pocket of the average citizen...
...His friend had written him inquiring what the soldiers at the front were thinking about...
...In war we are all in the same boat...
...and finally that the reason for this comparatively light tax on American profiteer corporations is that our business cannot stand a heavier one...
...For I am convinced that many, perhaps most, of the individuals responsible for profiteering are well in-tentioned...
...in 1916 £506,300,000 in 1917 £526,000,000...
...If our profiteers do not see this now, it is not because they are patriotic Americans...
...A Resolution...
...Such a resolution would, I believe, result in affirma-tive^ patriotic action by many corporations whose directors and stockholders would be ready to accept their war time responsibilities to their country, if only they were clearly outlined to them...
...BUT TO return to Mr...
...In 1915, Great Britain's export trade was £384,900,000...
...And yet, if you subject just these few companies to the English 80 per cent tax, you will get over $1,247,000,000 of revenue, or according to the Times, within about $440,000,000 of the total sum you propose to raise from excess profits taxes on all our war profiting companies...
...As to fixing what is a proper sum to be retained for dividends, wages and amortization funds, a company could under oath submit its figures to the Federal Trade Commission, or some similar body...
...it is rather owing to the fact that they have not yet teemed to think in terms of present day pateto&SS...
...And, naturally, this does not mean that all should be obliged to contribute equal sums of money to the government...
...For this reason, they are today far better able to pay an 80 per cent excess profits tax than the English companies...
...Why then, Mr...
...They feel that, by the time they get back, they will have earned a right to a new world in which there will be a new richness of opportunity and a new birth of justice for all men...
...And we need none of us feel sur-"_ vised or shocked if, when the conflict between J.aae two antagonistic forces within the profiteer is over, the older of the two is found in po3-rts.-.ion of the field and in control of the man's conduct...
...The sum of $1,559,331,730, which, as yon will see, these two hundred and eighty-seven companies have made this year in excess of the pre-war average, (an average taken in years of unusual prosperity) repre...
...But the main body of the public was not deceived by these tactics...
...For it shows that the profiteers have literally been having the time of their lives at the expense of the United States and the Allies...
...It will be remembered that Mr...
...On the contrary, it means that our contributions should vary widely...
...But he also wants to make a lot of money out of the war, and lay it aside against a rainy day...
...They are already taxed enough by the...
...Give the Profiteer a Chance...
...THE committee was made up of men of undoubted loyalty and high standing...
...and it is today the dominant social as well as political force in the agricultural districts where it is organized...
...and they went on record to that effect whenever there was an opportunity, though the profiteers were then much bolder in their efforts to prevent large war taxes than they are now...
...but these are the conspicuous exceptions which prove the general rule that the ruichasing power of the average citizen has decreased during this war, just as it did in Civil War days...
...This war, we hope, will prove a mighty leveller...
...The importance of the duties of your committee at this time cannot be exaggerated...
...it has grown too fast to be sturdy, and is still in a state of spindling adolescence...
...What Is Equal Sacrifice...
...It is already becoming recognized as a guiding principle of war finance, that, when war taxes have been paid, citizens of all classes should find that they have made something like an equal sacrifice for the country's common enterprise...
...The soldiers of America, of France, of England and of Italy who are facing death on the firing line, that the world may become a better place to live in, want to know how we stay-at-homes are helping...
...Now, however, patriotism has undergone alarming transformations—transformations so new, so confusing and so truly unbusinesslike, that the profiteer's mind has not yet been able to adjust itself to them...
...Immediately, although our committee was small and in command of comparatively slender funds, a powerful backfire was started throughout the country bj^the ENGLAND, though proverbially-conservative in matters of finance, has taken a position considerably more advanced than that of the President, the British Chancellor of the Exchequer recently predicting that, in order to finance the war, Parliament would have to resort to something beyond taxation— that is to say, to a direct levy on wealth...
...It is merely a case of placing the financial weight of the war where H will result in the least economic overstrain to the fighting and producing classes that axe the war's backbone...
...It is nothing more or less than a necessary war measure of proved practicability, based on the experience of England, on sheer common justice and plain common sense...
...We appeared before your Committee and asked that war expenses should be divided between bonds and taxes on a fifty-fifty basis...
...Townley, and other leaders^ of that organization advocated conscription of wealth, from the very moment the war began...
...Even last year the people were convinced that the stand now taken by Mr...
...After all, intense as may be the patriotic effort of the executives and stockholders of these comTHE other day I saw a letter from an American lad in the trenches...
...It is an open secret that, not long ago, tha President sent word to leaders of both Houses that he would adjourn Congress if they would promise him a revenue bill which would make it possible to divide the year's cost with approximate equality between taxes and bonds...
...New Patriotism For Old A Stirring Letter Has Been Sent To Claude Kitchin, Chairman Of The Ways And Means Committee Of The House, Urging A Higher Tax On War Profiteers By AMOS PINCHOT Amos Pinchot appeared before the Committee of Congress one year ago and urged a higher tax on war profits...
...And certainly, at this time, when so many people are suffering from the lack of good nourishing food and so many others are dying, or being wounded in the service of their countries, it should not arouse resentment in the well-to-do man, if he finds he is being taxed to the limit of his income, and that a part of his capital is drafted as well...
...They feel that, by the time they get back, they will have earned a right to a new world in which there will be a new richness of opportunity and a new birth of justice for all men...
...that it is pro-German in effect, in 1DO not think I exaggerate when I say that there is a strong, and 1 believe growing, conviction in this country that the war should be paid for by those who can do so without actual hardship...
...The soldiers of America, of France, of England and of Italy who are facing death on the firing line, that the world may become a better place to live in, want to know how we stay-at-homes are helping...
...I do not think I exaggerate when I say that there is a strong, and I believe growing, conviction in this country that the war should be paid for by those who can do so without actual hardship...
...and that we should go, (as we certainly can do so without disturbing business) at least as far as England in this direction...
...Because of this fact he has written a letter to Claude Kitchin urging that the new revenue bill contain substantially higher rates on profiteers...
...that the excess profits tax now favored by your Committee will probably yield only $1,690,000,000 or about $290,000,000 more than the present law which is approximately levied at an average rate of 31 per cent...
...Protect Our Own...
...McAdoo...
...The questions which naturally rise to one's mind are: What is the matter with American business...
...But still I am certain that Congress will have the whole-hearted support of the public, if it follows President Wilson's recommendations, however pitifully a few of our more unregenerate profiteers and their newspapers may howl to heaven...
...As you may remember, a year ago last spring, a committee was formed in New York City to urge income and excess profits taxes on something like the English scale...
...He replied, and I quote only from memory, "We are wondering whether you people back home are doing your part...
...and a real doubt was injected into the minds of many readers of metropolitan newspapers as to whether the Non-Partisan League was better than a nest of anarchists and traitors...
...Or, to be more accurate, the Ways and...
...financial slacker group...
...The report closes with a significant quotation from President Wilson's message to Congress: "The profiteering that cannot be got at by the restraints of conscience and love of country can be got at by taxation...
...AGAIN, it is immensely important, as a measure of war morale, as well as justice, that we should protect the men who are at the front...
...Means Committee seems to have made up its mind to "get at" profiteering to less than 50 per ceat of the extent that Parliament has actually got at it...
...To do this is not in any sense "an attack" on wealth...
...Our motives were privately as well as publicly attacked...
...archistic idea of conscripting incomes and profit* for war ase and treated accordingly...
...Many leaders were arrested, and in some cases indicted for sedition...
...English business corporations have prospered under an 80 per cent profits tax...
...And one advantage of this method of procedure would be that the earnings, approved by the government body consulted, could be governed by the actual condition of the company and its needs and peculiar trade position...
...It would clearly be more of a sacrifice for my friend to pay a war tax of a few dollars than for me to turn in my whole income and a good slice of my own principal too...
...Corporations which did not choose to come under the resolution would ba subject to profits taxes It might alaa a* aili bible to form a United States Business Administration (similar in form to the present United States Food Administration, but without rested power), which could be a voluntary association of employers and employes, organized for the purpose of conserving American war power by freeing the government and the public from the evils of profiteering...
...SUPPOSING, for instance, your Committee, or, for -that matter...
...and finally that it is a blow at out military power, in that this power is dependent on industrial production...
...he wants to be a good American, help the war and back up the boys at the front...
...We were singled out as the individuals mainly responsible for the anarchistic idea of conscripting income and profits for war use, and treated accordingly...
...For it would prevent strikes, stabilize production and give the corporations that came under it a standing and degree of good will that might serve them in good stead in the crisis which reconstruction days, after the war, will unquestionably usher in...
...Very much the same thing happened in the case of the Farmers' Non-Partisan League...
...it is not trying to punish anybody either...
...On the con* trary, the object is to prevent anybody front being hard hit by taxes...
...The Federal Trade Commission's report to the Senate, dated June 28th, 1918, is an admirable and yet a gravely discouraging document...
...In fact it was impossible, as many companies, for one reason or another, do not publish annual reports, although, in view of the right of Congress and the public to know who is making money out of the war and how much, it would seem that they should be required to do so...
...In fact they put themselves in an excellent position to pay taxes, most of them writing off, as they went along, the cost of new plants built especially for war business...
...Thousands of letters many of them containing contributions, flooded the committee's headquarters, and literally hundreds of patriotic newspapers published our briefs and advertisements without charge...
...The Non-Partisan League, instead of being decimated by profiteer drum fire, steadily grew in membership and influence...
...Although the Non-Partisan League was absolutely patriAGAIN, it is immensely import-apt, as a measure of war morale, as well as justice, that we should protect the men who are at the front...
...LAST week we read in the newspapers that the framers of the revenue bill had decided that the English 80 per cent tax was too high...
...Why then, Mr...
...and they went on record to that effect whenever there was an opportunity, though the profiteers were then much bolder in their efforts to prevent large war taxes than they are now...
...he has acted upon his convictions personally, as well as through Mr...
...Why not make an effort to get at it both ways...
...In the old days, being patriotic only demanded from the man of property an enthusiastic conviction that the United States was the best country on earth, and an occasional attendance at functions where the sentiments of revered, but very dead persons were repeated in a parrot like manner which stirred up no social obligations and was highly satisfactory to all present...
...Moreover, our corporations have a decided advantage over British ones from the fact that, for almost three years before we went into the war, and while we had no excess profits tax at all, they were making big money selling to the Allies...
...And yet I believe that, if the profiteer were directly appealed to by persons of authority, as instance, the gentlemen forming your Committee, he might, in many instances, be persuaded to act like a good loyal citizen...
...If this is true, the man who serves with his brain here at home should be satisfied with a reasonable return...
...The figures show the so-called excess profits, that is to say, the amount by which present earnings exceed average earnings before the war...
...we are wondering what you are doing for democracy back home, while we are fighting for it over here...
...BEARING in mind, let us assume, for the sake of argument, that I have a million dollars, bringing me an income of forty thousand a year net, while my friend has a salary of thirty dollars a week, which is less than he can support his family on comfortably at present prices...
...Some of their organizers were mobbed and beaten by masked men...
...On the contrary, the object is to prevent anybody from being hard hit by taxes...
...We should therefore make it a po^it of honor to take care of their interests during their absence by seeing to it that, when they return, they and their families will not find themselves embarrassed any more than is absolutely necessary by a great bonded debt, to be paid as bonded debts always have been, out of the pocket of the average citizen...
...I believe the percentage mentioned was 40 per cent taxes and 60 per cent bonds...
...to furnish Congress, the Federal Trade Commission and various departments of the Government with information in regard to profiteering (to be considered confidential at the option of the person furnishing it...
...Kitchin, should they not do so ? What is the distinction between British and American business that makes necessary a special coddling of American war profiting concerns...
...Unfortunately, the information conveyed by the tables which I have prepared, is too limited to be specific on this point...
...The corporations that are performing the tremendous work of supplying the government with war materials should be encouraged...
...that it weakens the morale of the fighting and producing classes, decreases their efficiency by increasing the cost of the ordinary necessaries of life...
...They believe that, if this war for freedom is truly to result in freedom, it must be fought by the civilian at home as well as by the soldier at the front...
...and get a decision as to what it was reasonably entitled to...
...And be it further RESOLVED That this body goes on record as believing that war profiteering—i...
...MOREOVER, we must remember that the profiteer's two conflicting wishes (the one to be patriotic and not exploit his country in war time, and the other to make money as fast aa possible) are apt to be unequal in strength because they are unequal in age...
...Immediately, although our committee was small and in command of comparatively slender funds, a powerful backfire was started throughout the country by the financial slacker group...
...Nevertheless, the propositions of our committee, which appeared before your Committee as well as before the Senate Finance Committee received very wide public endorsement...
...Some four million people in different sections representing all classes, from business men's clubs to church conventions, labor unions and farmers' associations, at once passed resolutions endorsing our recommendations...
...MOREOVER, our corporations have a decided advantage over British ones from the fact that, for almost three years before we went into the war, and while we had no excess profits tax at all, they were making money selling to the Allies...
...New Plan Offered...
...It is true that in some few trades wages have gone up faster than prices...
...we are wondering what you are doing for democracy back home, while we are fighting for it over here...
...We were singled out as the individuals mainly responsible for the an...
...The Older Wish...
...Congress, however, does not yet seem to have made up its mind to "get at" profiteering by taxation...
...This thought, I learn from many sources, is running through the armies everywhere...
...There is, I believe, nothing consciously un-American, or pro-German, about the vast majority of our profiteers, the explanation of their conduct probably lying in the fact that, till now, they have failed to realize the new obligations of citizenship raised by the war, and have proceeded on the old antebellum plan of charging as much as the traffic would bear...
...But he know3 in-s..>.ctively and with the cumulative certainty of fixed purpose, that he does want to make mon-<y' out of it...
...Congress itself, should pass a resolution something as follows, and mail a topy to the president of every important company, with the request that he should send copies to all stock-holders and employees, and post it conspicuously about the offices or plants: In view of the fact that the United States is at war with Germany—a war in which it in imperative that our Government should have vast sums to expend for military purposes, and equally imperative that our fighting and producing classes should be free from economic exploitation, be it RESOLVED That the Ways and Means Committee of the House of Representatives (or the (Congress of the United States, as the cane may be) hereby earnestly requests that, until the war's end, your company will turn over to the government for said war purposes, all earnings in excess of what is needed by you (1) to pay reasonable dividends to your stockholders...
...rise in the cost of living, which has increased considerably faster than the income of the wage earning and salaried classes...
...His letter which is republished was accompanied by a statement showing the tremendous war earnings of many of the large corporations in the United States.—Editor's Note...
...Even last year the people were convinced that the stand now taken by Mr...
...Particular functions of this organization would be to urge corporations to comply with the requests embodied in your resolutions...
...This thought, I learn from many sources, is running through the armies everywhere...
...Either of our sacrifices, however, would be utterly insignificant when compared to that of the man who gives his life...
...His friend had written him inquiring what the soldiers at the front were thinking about...
...They are, for the present, in Europe fighting our battles, and consequently they are unable to speak for themselves...
...e., using war conditions as an opportunity to make and keep extraordinary profits—is unpatriotic and prejudicial to American military success...
...The struggle for freedom, as Edmund Burke reminds us, is waged as often on the battle field of taxation as on that of war...
...He should scorn to enrich himself out of the war, while so many of his fellow citizens across the sea are fighting at modest pay and in surroundings that are far less safe and comfortable...
...It is merely a case of placing the financial weight of the war where it will result in the least economic overstrain to the fighting and producing classes that are the war's backbone...
...Wilson's words, "Tha profiteering that cannot be got at by restraints of conscience and love of country can be got at by taxation...
...Does this show that an 80 per cent tax is crushing British business...
...Indeed, those who haven't enough money to live on decently should not be taxed at all, or merely to a nominal extent...
...Soldiers...
...JUST how much war revenue you could raise by an excess profits tax like England's levied on all American excess profits, I do not venture to predict...
...If not, why should a similar tax crush ours...
...It is my belief, too, that purely as a business policy, compliance with such a resolution would be far from unwise...
...Their houses were painted yellow, their business integrity was generally attacked...
...And now the report of the Federal Trade Commission on "Meat Packing** and "Flour" quite justifies the public in its previously formed opinion that the assault on the Non-Partisan League's loyalty was engineered by people who were trying to stave off uncomfortable exposures as to their own...
...President Wilson has not only seen the necessity of keeping down the bonded debt by levying heavy excess profits, income, luxury and inheritance taxes...
...Sum Would Be Double...
...Naturally, exact justice could not be done...
...give me the power to tax, and I can enslave or free any class of the population, from the millionaire to the humblest worker in the mine...
...They should be well paid for their efficient and invaluable services in helping to beat the Kaiser...
...Concentrated Wealth Versus Democracy *T"HE other day I saw a letter from an Ameri-* can lad in the trenches...
...panies, it amounts to a lesser sacrifice than does the effort of our officers and common soldiers in France, who are facing death on the firing line for a much smaller reward...
...The story of a nation's liberties is generally written in its tax laws...
...BUT still I am certain that Congress will have the wholehearted support of the public, if it follows President Wilson's recommendation, however pitifully a few of our more unregenerate profiteers and their newspapers may howl to heaven...
...Before April, 1917, the word "patriotism" did not have its present content of inconvenient sacrifice...
...why cannot ours...
...and to cooperate in the broadest spirit with the purposes of the resolution...
Vol. 10 • August 1918 • No. 8
