FINANCING OF THE WAR
Follette, Robert M. La
Financing of The War An Editorial by Robert M. La Follette LA FOLLETTE'S MAGAZINE proposes to fight for a just system of financing the war—one that will be adequate and based on the principle that...
...We have authorized the issue of nearly three and three-quarter billions of bonds which will be sold during the present year...
...If the voters could but come to understand what it means to them, to compel wealth to pay its share now, instead of making "vast loans" and having bond sales following bond sales, each one causing more and more inflation and higher and higher prices for the present, and then on top of it all high consumption taxes on the masses for the next twenty-five years to pay the bonds with interest,—if the voters could but come to understand the issue clearly, we felt that they would warn their Senators and Representatives to vote to conscript wealth at this session or be retired to private life...
...per bushel at the sale...
...How is it with the farmer...
...But you did not hold your paper right...
...Old Een Johnson well said that patriotism is the last refuge of a scoundrel...
...If the revenue bill of last session had taxed these millionaires, had taxed all wealth in the form of surplus incomes and war profits, fearlessly, honestly, patriotically, there would have been no deficiency in the Treasury on the 30th day of next June, But it was seen at the outset that to strive for the just taxation of wealth must fail...
...that at this session the President and his Secretary of the Treasury would make it known at the outset that wealth must be taxed more justly...
...Libel A Decision by the Supreme Court of Wisconsin THE essentials of a libelous publication are too well established in the law to require discussion or even citation of authority...
...There is no time' to be lost...
...He saw that contest fail in its main purpose to impose such just taxes upon these ample sources of revenue, as would have rendered unnecessary or at the very least have greatly reduced tnese "vast loans" through excessive bond issues...
...We shall collect in round numbers three billion dollars of war taxes under the revenue bill passed last ression...
...His competitors all do the same thing...
...Every day, Sundays included, lias work for the farmer...
...Who steals my purse steals trash...
...Similar instances may be cited from all over this broad land...
...It lasted throughout the month of August...
...Would it not make the hard condition of the 98 per cent a little easier...
...The farmer plants his crops from three to twelve months,before he can sell...
...But it answers to the conProfiteers Hate Senators...
...The Gisholt Machine Company reported under this Wisconsin income tax law its net profits for the years 1911 to 191G inclusive as follows: 1911 _____________________ $21,190 1912 ____________________ 29,518 1913 ____________________ none 1911 ____________________ none 1915 (first year of the «ar) 1,130,040 191G _________________2,378,884 It will be seen that its net profits were nominal prior to the war, that the first year of the war its profits were nearly 100 per cent, and that the second year of the war its profits were nearly 200 per cent of its capital stock...
...If they can be intimidated to give up the fight it saves big dividends to Wall Street interests...
...If we raise a smaller amount by taxation that we ought, then we will be compelled to raise, or attempt to raise, a larger amount by issuing bonds than we ought—possibly a larger amount than we can raise in that way...
...He saw the purchasing power of the dollar steadily diminish under the influence of that inflation...
...The people should be deeply interested in this subject...
...And now comes the report of the Treasury...
...The history of the United States, like that of England, has shown the fallacy of attempting to leave the burden of the war for posterity to pay...
...It has a capital stock of $1,250,000...
...This official report shows that we added seven thousand nine hundred and twenty-five newly made millionaires to the millionaire class of this country in 1916...
...This would leave capital unimpaired, business uninjured and the owners of large incomes an assured comfort...
...Such a person occupies a very high place in community life...
...And then, too,, we were still hopeful that the President in his first message, upon the convening of Congress in December, would strongly recommend a thoroughgoing war tax bill that would give us a real conscription of wealth...
...And yet this great body of our people must furnish 98 per cent of the soldiers to fight this war...
...McAdoo estimates the deficit in tlio Treasury's general fund at the end of the present fiscal year on June 30, 1018, at $."»,• 128,203.703, while the estimated cvo«'*s of disbursements over receipts for the fiscal year ending June 30th, 1010, is $7,027,073,-080...
...No one who can read the "signs of the times" could doubt that the tirades of abuse leveled against these senators was directed by New York war profiteers...
...The opposition was too powerful...
...We were disappointed but determined to fight the harder at this session, to establish a sound and just financial standard of war finance...
...I, sec...
...Thus, in general, malice is an essential element of libel, but not, necessarily, malice in the sense of actual ill will and intent to injure, constructive malice, so called,—perpetration of the act without lawful excuse;—is sufficient...
...or a hot wind may have blighted it...
...ho had to secure seed and plant it...
...The farmer is patient and self sacrificing...
...she is able to face an extension of that principle as far as necessary and possible...
...His profits are uncertain—and figuring his work and the work of the family it usually turns out that he has not received the wage of his hired help...
...15, says: "All the energies of the National Defense society will be devoted to the awakening of public sentiment against Ser.ators La Fol-lette, Stone, Reed, Gore, Hardwick, Gron na and Vardaman, with a view to their expulsion from the senate...
...438, 138 N. W. 111...
...What is true of wheat is true as to his other crops...
...Britain recognizing this, is now unprecedently conscripting wealth and very soon she must greatly increase taxes on incomes...
...If we spend a certain number of billions on war, we are compelled to raise just that number of billions by levying taxes and issuing war bonds and war certificates...
...In the meantime some further word from the President upon this vitally important subject would have been most opportune.' Surely the call for him to speak has been most urgent...
...His peace profits would remain to him unimpaired...
...The additional $100,000 would, clearly be war profits and could be taken for the benefit of the government without any sacrifice to the owner...
...The freedom of the press has never been, and quite likely will not be, extended so as to accord -to persons circumstanced as the respondents were special right to injure or destroy human character by libelous pub-lication...
...It would have won the day for just taxation, reduced measurably the size of the loans, the bond sales, checked inflation, and halted the increase in prices on the necessaries of life at a time when they are well nigh intolerable...
...Indeed the tax laid on wealth,—on tTift surplus incomes of the rich and the profits derived from war, should go to the extent of exacting all of the surplus incomes and all of the war profits if necessary...
...Wealth escaped with a gentle slap on the wrist...
...And we surely had some warrant to hope these things of the President...
...the summer season may have lacked in rain...
...Differences, commonly, in such field spring, not from what is libelous in the abstract, but whether the particular article would ordinarily be understood so as to have a libelous effect...
...It is no wonder that the farmer is heard to complain now and again...
...They are here in Washington, like wolves in full cry, hot after fat contracts which have an odor that is beginning to make spectators hold their noses and look the other way...
...So long as his war lasts that will continue a vital issue...
...The Progressive Senators, including two from Wisconsin, voted for an 80 per cent tax on the 1916 war profits at the last session of Congress...
...England had proved the wisdom of this method I have outlined...
...To make the problem concrete, we will take one manufacturing concern in the home town of La Follette's Magazine—Madison, Wisconsin...
...The Farmers THE FARMERS are asked to produce to the full limit of capacity those things that will be helpful in feeding and clothing our soldiers and those of our allies...
...The law as to what is within the field of conditional privilege and what is not, needs to be littla discussed here, if at all...
...And he witnessed in silence the prolonged struggle in the Senate last session for a higher tax upon surplus incomes and upon the constantly increasing war profits...
...New Crop of Millionaires Let us look this thing squarely in the face...
...But alas, that word was not spoken...
...He haa witnessed the issue of bonds and then more sonds as a basis for "vast loans," and the "very serious hardships and evils" resulting from the "inflation produced" by those loans...
...He cannot count his profit or losses in advance...
...His increase comes from the hardest kind of toil and the strictest economies...
...Mr...
...The President was silent...
...The owners of big incomes and their brethren, the war profiteers, can now rest in security in so far as Mr...
...There is more reason for restricting tho privilege respecting such particular class because of the special opportunity to do harm, than for extending it...
...The law of libel is of much importance...
...His legitimate function is to inform, to educate, to entertain, to guide, to dignify the good by legitimate methods, to stand for truth and condemn error and, beyond and environed in these generalities, to satisfy the legitimate desires of the reading public,—never to maliciously accuse falsely, nor blacken one's character nor expose him to public hatred, contempt, and ridicule, nor produce injury to him in his business, trade, or profession...
...From the moment when it became apparent that the element in control of Congress at the last session would not impose a just and reasonable war tax upon wealth—from that moment one of two things became inevitable :v Either a deficiency, or an excessive bond issue* So strong was the element which favored a low tax on incomes and war profits, that it was at once seen to be futile to propose such a tax as would raise substantially one-half of the total war cost from these sources, for the period ending with this nscal year...
...This war is making some people very rich...
...390, 125 N. W. 913...
...The revenue bill passed...
...General damages, which so follow, may be added to by exemplary damages, upon proof of th:.t actual malice which overcomes the protection of conditional privilege...
...Of this report the New York Times says editorially...
...Life itself without worth-while character is of little or no value to its possessor or any one else, well said by Iago: "Good name in man and woman, dear my lord, IS the immediate jewel of their souls...
...We must not place the burden of war taxes upon the already heavily laden until wealth has devoted its share to the government which has made such wealth possible...
...The Steel Companies manufacture their wares on orders taken in advance, at prices fixed in advance to be paid on delivery of the goods...
...Bonds and More Bonds Bonds, and bonds, and then more bonds...
...There are almost exactly enough men in this 1916 crop of millionaires to make two entire regiments of infantry...
...ANEWS ITEM sent out from New York Oct...
...The war revenue bill passed at the last session placed a tax upon excess profits but did not make any distinction between concerns making peace profits only and those making war profits...
...To illustrate, suppose a going concern of long standing had net profits in peace times of an average of $100,000 per year, Now suppose the same concern with the same invested capital, because of the war, had net profits in 191G of $200,000...
...And it is generally conceded that no one shouM make money out of the misfortunes of the people...
...There should be less criticism of the farmer and a better understanding of his problems...
...Billions upon billions of dollars must yet be raised to win the war...
...It overruns with suggestions and arguments for other "vast loans" to be added to the "vast loans" already made...
...Conditional privilege as regards newspaper activity does not go beyond fair criticism :r...
...It's a safe wager that these millionaires are all patriots, strong for "democracy," strong for war of course...
...A long life' and good health may secure for him a bare competence for his old age, hardly more...
...This leaves all peace profits and 20 per cent of war profits to the taxpayer...
...the winter season may have been too open and too cold...
...Surely when we ask the farmer to ruin his soil by raising excess wheat for the war a guaranteed reasonable price is both just and necessary, and as the things he buys go up in price so must the things he sells command a better price...
...In the opinion of the Secretary it will 1»e necessary to authorize an additional issue' of bonds to the amount of $."»,010,000,000 during the present fiscal year, and if loans to the Governments of our Allies are to continue at the rate of $500,000,000 a month, that very considerable item, with interest charges added, would swell the aeficit in next year's balance sheet to a little over $14,000,-000,000, which would be the bond issue requirement of that year...
...That was all...
...Twas mine, 'tis his, and has been slave to thousands...
...In these brave days you should read your paper up side down...
...Brave boys are they Gone at their country's call...
...And he remembered as we ought to remember that we narrowly escaped a financial breakdown and that it produced inflation and high prices for the people at the time and then left a great war debt especially after the Civil War to be paid off by imposing high taxes upon the masses for more than a generation of time following the war...
...The best efforts of those in the Senate who made the contest to increase the tax profits and excess incomes resulted in raising from these sources but little.more than half a .billion additional to the amount proposed by the majority...
...competency of legal remedies to fully redress, because of there being no accurate standard by which the injuries can be accurately measured...
...Indeed they are already compelled by existing prices before the end of our first year in the war to face the winter with but a scant supply of the bare necegparies of life,—food, fuel and clothing...
...President Was Silent Oh, for one plainly spoken word from the Chief Magistrate of this country in favor of the highest tax on incomes and war profits in that crucial time...
...Is it too much to demand of wealth that it shall make this contribution in money, out of surplus incomes, and swollen war profits...
...He rises with the crowing of the eoek, spend an hour or two before breakfast at-work doing "chores," has his breakfast, does a ten-hour day's work, has supper and againtspends an hour or two doing up the chores...
...the chinch bugs may have destroyed the crop...
...Joseph v. Barrs, 142 Wis...
...There is no difference of opinion, as we understand it, between counsel, or counsel and the court, in respect to the matter...
...He may grow cattle and wait two or three years for the day of sale...
...respect to the relations of persons to the public and report of facts...
...Nevertheless the farmers are responding to the demands of their country patriotically and uncomplainingly and they will continue to do so as long as they are not exploited by the war profiteers...
...Already powerful influences are at work to prevent any increase in the tax on war profits at this session, Unless the voters act at once they will pay the penalty in heavier taxation after the war, and in additional loans resulting in further inflation and still higher prices, which will inevitably follow in a few months...
...We arc at the present time engaged in selling two billions of war saving certificates of indebtedness...
...Of course there will be a treasury deficit...
...Hut if by fortune a good crop comes to the farmer the prices may be low and the seed that cost him $2.00 per bushel the year before may bring only $.7...
...he had to harvest and thresh...
...He has approved the largest bond authorizations to the world's history...
...stitutional guaranty of "justice . . . completely and without denial . . . conformably to the laws...
...While we were striving in the Senate to justly increase the tax on incomes and war profits, thereby reducing in so far as possible the "evils" resulting from "vast loans,"'Chief Justice Reading gave to the press an interview warning us of the financial difficulties and dangers with which we were menaced by the course of the majority...
...Nine months have passed since those words were Bpoken...
...War Patriotism Spells Sacrifice The Gisholt Machine Company is probably as patriotic as any of our war profiteers...
...More than that, he must gamble on the crop to be produced...
...Logically, the government might take 100 per cent of this wealth without imposing any sacrifice on the owner...
...He is severely critical of anyone who differs with him on war policies...
...What a commentary it is, that this admonition of the wrong and folly of taxing wealth lightly, and borrowing by bonding heavily, should come from the Chief Justice of England at the critical hour when the issue was before the Senate...
...But- it will he very satisfactory to Wall Street...
...And new with all of these billions gathered into our Treasury for war purposes, so fearful is the drain, as disclosed by this report, that by June 30th, the end of the present fiscal year, only six montlis from now, we skau have a deficiency amounting to $5,128,-203,79J...
...The profiteers slipped through with a thirty-one per cen*t tax on war profits, while their English brethren pay a war profits tax Of eighty to eighty-six per cent...
...This they are doing under many handicaps...
...But let it be understood now that the fight for just and righteous taxation of wealth is to go on in Congress...
...Such as it is, it applie3 to newspapers as well as to individuals...
...In citing our own history as "showing the fallacy of attempting to leave the burden of the war for posterity to pay," Chief Justice Reading had in mind the bad record we had made in the war of 1812, the Mexican and the Civil Wars...
...His only chance is in using bad judgment in buying or in managing his business...
...9.) Character is man's choicest treasure...
...Const, art...
...In the field within which libelous activity may operate, great wrongs may be perpetrated, resulting in loss, sometimes beyond the...
...They were defeated, but the test must soon come again...
...That, generally, is a question of law, but sometimes the characterizing circumstances are such that it is a question of fact, or of mixed law and fact...
...tis something, nothing...
...No, no, these patriots are not in the trenches of France,—not yet...
...If a published article naturally tends as suggested, the right to recover general damages follows as matter of course, in the absence of truth as a justification or circumstances of legal excuse, this, as indicated, not including mere negligence, accident, good faith, good motives, or sense of duty, except as said, in the field of conditional privilege where something' more than implied malice is required...
...McAdoo is concerned...
...Within the covers of this report the advocates of taxing wealth will find no comfort...
...The early season may have been too dry or too wet...
...They consist of an appalling appetite, a clear conscience and sound sleep, and little else...
...The merchant buys his goods, adds 10 or-20 per cent, as the case may be to the buying price, and that makes the selling price...
...The wrongdoer who robs one of land or money or anything material, essential to his pursuit of happiness, is reprehensible and unworthy of a place in the social state, but one who intentionally robs another of his good character is a wrongdoer in a higher degree, from a moral standpoint, whether so recognized in the law or not...
...We have already issued and sold, in round numbers, six billions of bonds...
...He plants his winter wheat in the fall, harvests it the following summer, and is ready to sell the next fall...
...He had to fertilize, plow and harrow the land...
...Thus it is evident that cases of this character are of no trifling nature, especially when the professional life of one is involved and the alleged assassin of it is a newspaper proprietor whose activities reach a wide circle, and who has come to be looked to for guidance of public thought...
...He has to take the long chance...
...Financing of The War An Editorial by Robert M. La Follette LA FOLLETTE'S MAGAZINE proposes to fight for a just system of financing the war—one that will be adequate and based on the principle that taxes should be laid .ccording to the ability of the people to pay...
...Wisconsin has a state income tax law under which corporations must report their net profits...
...He has been active in raising funds to conduct the war by the sale of Liberty Uonds, but he is opposed to any increased tax on the war profits or excess profits...
...However the farmers have beer bitterly criticized by bankers and others for not doing more for the war...
...He cannot sell in advance—he must gamble on the market...
...They have been long and anxious months for the American people...
...There Is one class cf property that should immediately respond to any just system of taxation, and that is the wealth produced because of war and in excess of peace time profits...
...This tax will average about 31 per cent of the excess profits...
...It attracted the attention of students of war finance not only in America but in England...
...Lord Chief Justice Reading came to this country two years ago as the representative of Great Britain at the time of the first Anglo-French loan...
...Would it not promote a better feeling toward those to whom war brings something besides hardship and woe...
...Only think of it...
...In order to facilitate the work of changing and re-entering the addresses upon our subscription books and mailing lists and obviate the expense of sending out personal statements announcing that renewals are due, subscribers are urgently requested to renew with as little delay as possible...
...The war demands sacrifice, and sacrifice should be universal...
...That is the modern way—the way all manufacturers- make and sell goods...
...In the meantime many things may have happened...
...His standing as an authority on government finance is attested by the fact that he was selected for that important service...
...The annual report of the Secretary of the Treasury, recently issued, is but the forerunner of this obvious conclusion...
...We increased the bill by only half a billion...
...or hail may have ruined it...
...England taxes war profits 80 per cent...
...we did then what we are beginning to do now,—namely, finance this war by making "vast loans" for from three-fourths to four-fifths of the amount required and in order to let wealth off easily raising the balance by taxation...
...And yet while thousands upon thousands of his fellow citizens are making extreme sacrifices, his sacrifice and the sacrifice of his company are not a sacrifice at all but on the contrary are a tremendous net gain to both him and his company as a result of the war...
...Every impartial student of government finance would agree that not less than fifty per cent of war expenditures should be met by a war tax on wealth...
...The joys of the farm are few and far between...
...Its President is on the Dane County Defense Council...
...You must have "seen it in the paper...
...He cannot estimate th'-m —lie can only bet against the weather, the wind and hail, the rust and the bugs, and having won against these odds he must meet trust-made prices be they fair or unfair...
...That is the program for financing this war...
...Quite a jump that to make in millionaires in one year...
...The increased cost of living due directly to the war has already taxed the great body of the people beyond the point where they can hope to enjoy an assurd comfort...
...But tne message was silent upon that subject...
...Renewals The subscriptions of those who became subscribers with the first issue of La Follette's Magazine, and have renewed at the close of each year, expire with this December issue...
...It should be remembered that farmers take long chances that other producers do not have to take...
...Warning of Lord Reading The battle in the Senate for a higher tax on incomes and war profits was a notable one...
...So it is not to be thought that mere good faith, honest belief in the correctness of the publication, or good motives, or accident or inadvertence, is, ot itself, a defense, or even sufficient to mitigate as to actual damages, because such faith, belief, and motive are not inconsistent with malice in law arising, as a legal result, from the perpetration of the act of publishing an article, the natural tendency of which is to make its victim appear ridiculous or contemptible, or a subject of hatred, or to disgrace him in society or injure him in his business...
...They are strongly intrenched in Wall Street, where they are fighting to make more millions...
...Is it unjust...
...A War Profiteer The Gisholt Machine Company, Madison, Wisconsin, is the manufacturer of machinery necessary for war purposes...
...This is no more than wealth's fair share of the war burden...
...Then you may get the truth...
...he had to winnow and haul the grain to market...
...Thus one cannot efficiently claim immunity from liability for damages inflicted by publishing with express malice a false and defamatory article, by putting up the shield of conditional privilege...
...His attention was directly called to the debate in the American Senate on the revenue bill and he was asked to outline'for the benefit of the American people how England had dealt with the same problem...
...The merchant knows in advance what he is going to sell his wares for...
...The work of correcting the stencils entails an enormous amount of labpr and the publisher asks subscribers to assist as much as possible by making their renewals promptly...
...In theory, that is wrong because, in contemplation of law, the collective judgment of a constitutional jury, guided by a wise judicial administrator, is our highest attainab'- ideal of justice and, so, must be deemed .'nfnllibly right in law, though morally it jaften is not...
...December third the report of the Commissioner of Internal Revenue was issued...
...Arnold v. Ingram, 151 Wis...
...That the foregoing comment correctly interprets the Secretary's purposes as to the present fiscal year is clearly shown by the following quotation from the Secretary's report: "I have indulged the hope that additional bonds could he sold on such reasonable terms that the remainder of the funds required to meet the estimated expenditures for the fiscal year 1018, might be raised by that means and thus escape additional revenue legislation at this session of tile Congress.' The Fight Will Go On There you have it...
...No one should escape...
...This is an increase of more than 34 per cent in a single year over all the millionaires which we had accumulated and had on hand up to 1915...
...We had cherished the memory of his words in that fateful war message in April when he said: "It is .our duty I most respectfully urge to protect our people so far as we may against the very serious hardships and evils which would be likely to arise out of the inflation which would be produced by vast loans...
...that the people were not to be required to fight the battles of this war and then after a blessed peace shall come, find themselves mortgaged by wantonly excessive bond issues, to grunt and sweat under war tax burdens all the remaining years of life...
...We were beaten...
...They should let their Senators aud Representatives know in very certain terms that they demand the highest rates of taxation on sui-plus incomes and war profits...
...The poor cannot escape and wealth must not escape...
...The senators named were all active in an endeavor to properly tax these interests...
...In reply Baron Reading was quoted as saying: "Sound finance requires that we pay for the war as far as possible out of war-time taxation...
...With the support of the President we would have materially altered our plans at the outset and in the end Congress would have conscripted wealth as it had conscripted men...
...The farmer is a gambler by force of circumstances over which he has no control...
...One need not go further on the subject of malice in proving a charge of libel than to prove the publication, unless the situation is such as to fall within the field of conditional privilege, and then malice in law is circumstantially rebutted and malice in fact, or express malice, as it is otherwise called, is required...
...But he that niches from me my good name Robs me of that which not enriches him And makes me poor indeed...
...It does not extend to false statements of fact or unjust inferences, nor taunts, nor contemptuous and insulting phrases...
...Hope is Deferred But we are sustained by the hope that those in control of Congress did not have the support of the Administration in defeating our efforts...
Vol. 9 • December 1917 • No. 12
