H. Gary, for example, who cannot have been altogether pleased with the proposals for further immigration restriction, nevertheless characterized it as "a masterpiece," which "does not favor one party or another. It is not antagonistic to any political party. It does not favor capital or labor, as they are commonly classed, nor is it antagonistic to either. It does not favor the rich man nor the poor man. . . To me, President Coolidge has been a great surprise. I have seen him but once, and then only for a few minutes at a public meeting. I know him only from what he has said in public. But if anyone wished to obtain a favor that was questionable through the influence of the President of the United States, Mr. Coolidge, I would say, would be the last person to approach!"

Former Democratic Senator O'Gorman says: "There is little in the President's message that a good Democrat could not approve." Neither Democrats nor Republicans are anxious to pay unnecessary taxes, nor keep up the cost of living. The proposals of Mr. Coolidge and Mr. Mellon are not regarded as Republican proposals, but judicious measures for the general good. The public at large, though differing with the President about the details of various measures, appears to be with him on the main points. Now that he has taken the people into his confidence, the opinion prevails that his long period of silence was well spent.

Meanwhile the Coolidge hat is in the ring for the Presidential nomination. Cleveland, Ohio, has been selected, with the sanction of the White House, as the convention city. Chicago, which for twenty years has had the Republican convention, is said to have been passed by because of too great an apparent fondness for Senator Johnson.

The campaign to nominate President Coolidge to succeed himself is

now well on the way, under the guidance of William M. Butler, of Massachusetts. As the New York Times remarks: "If the Republicans in Congress accept Mr. Coolidge's program, the acceptance of his personality will be as much of a mere formality as the selection of the convention city. If they don't accept his program, it will not matter where they hold their convention or whom they nominate, for both will be only preliminaries to defeat."

ᄆᄆ

Weighing the Bonus in the Balance

"F

OR seven years the people have borne with uncomplaining courage the tremendous burden of national and local taxation. These must both be reduced. The taxes of the nation must be reduced now as much as prudence .will permit, and expenditures must be reduced accordingly. High taxes reach everywhere and burden everybody. They bear most heavily upon the poor. They diminish industry and commerce. They make

agriculture unprofitable. They increase the rates of transportation. They are a charge on every necessary of life. Of all services which the Congress can render I have no hesitation in declaring this to be paramount. To neglect it, to postpone it, to obstruct it by unsound proposals, is to become unworthy of public confidence and untrue to public trust. The country wants this measure to have the right of way over all others."

This paragraph of President Coolidge's message to the Congress has met with universal approval. The measure in question was detailed in a statement by the Secretary of the Treasury, which was even more comprehensive and no less plainspoken than the endorsement of it just quoted. Behind the Mellon

IT'S A NICE TRICK IF HE CAN DO IT
-Cassel in N. Y. Evening World.

made perfectly clear. No tax reduction is possible, "if the Government is to be committed to new and extraordinary expenditures."

Barring the passage of a bonus measure, existing revenue laws are calculated by Secretary Mellon to be high enough to yield a surplus of $300,000,000. It being a political impossibility for Congress to permit a surplus to remain in the Treasury vaults, it becomes the part of good stewardship for the Secretary to devise means of preventing the collection of this surplus.

He proposed, in his now famous statement, that normal rates on income taxes should be reduced from 4 and 8 per cent. to 3 and 6 per cent., allowing a 25 per cent. reduction on earned incomes. Further, he proposed that surtaxes should begin not at $6,000, but at $10,000, and should climb up to a maximum of 25 per cent. instead of to the present 42 per cent. Incidentally, he urged the adjustment of numerous minor inequities of the present system, and the immediate repeal of "nuisance" taxes on amusements, and so forth.

Nearly 6,000,000 persons pay taxes on incomes of $2,000 to $6,000. They have the liveliest interest

in the Secretary's proposals. More than half a million persons have incomes ranging from $6,000 to $10,000. The Secretary would lift the surtax from them, besides reducing their normal tax. Could a program well be found which would extend its benefits to a wider circle? If "the greatest good of the greatest number" is the end and aim of democracy, the Secretary's purpose will be seen as serving democracy's chief function.

The suggestion that surtaxes be cut down from a maximum of 42 per cent. to a maximum of 25 per cent. has served as the text for much castigation of the Mellon proposals. But the plain fact of the matter is that the high surtaxes on large incomes do not "produce." They merely drive capital into unproductive, but tax-exempt, securities. Men of wealth take their money out of railroads and new business ventures when 50 per cent. of their gains goes to the Government. Progressively, year by year, as municipal and State extravagance has augmented the tax-exempt issues, the returns to the Federal Treasury from large incomes have dwindled. Therefore, the Secretary, and the President after him, has urged a

constitutional amendment to stop the issue of tax-exempt securities.

It is proposed then to remove millions in taxes which now burden the middle and lower middle classes. They mainly will benefit. Tax reduction for the wealthy also will redound to their advantage, and to the advantage of the entire community, since reduced prices on many commodities will follow the tax cuts. "Cutting down public expenditure," as the New York Times put it, "always makes large private expenditure possible. Lightening the taxes of manufacturers and business men means reducing the prices which the consumer has to pay."

Soldiers' bonuses have already been provided by nineteen States, and three more have submitted bonus measures to referendums. Probably authorization to pay them will be forthcoming.

These twenty-two States, estimates the Post, paid three-quarters of the total internal revenue collected last year, or nearly two billion dollars out of the two and a half billions. Is it possible, this paper asks, that the citizens of these States, being the principal taxpayers, and having already paid bonuses to their soldiers, will be

bonus?

The Government has not been niggardly with the soldiers. Over two billion dollars have been paid out for them since the war. It is argued that this should be sufficient. However, John R. Quinn, National Commander of the American Legion, insists that the bonus scheme will cost only $80,000,000 a year-"only onefourth of the Secretary's proposed tax reductions of $323,000,000 a year." Therefore, he maintains, the nation could have 75 per cent. of the prospective tax cut and still have enough money to adjust the veterans' compensation. It goes without saying that such an estimate of the cost of adjusted com

A

MONG all the giant industries of America, railroading is easily first and foremost. More of the people's money is invested in railroads than in any other form of enterprise. For about ten years that investment has brought in exceedingly meager returns to the thousands of stock- and bondholders. But this year promises to yield a billion dollars in railroad dividends-enough to make up for the famine of the past decade.

Since the roads were turned back to their owners by the Government, railway executives have spent nearly two billion dollars preparing for the return of normal business

Building on the basis of the EschCummins transportation act of 1920, which undertook to assure them rates such as would produce a "fair" yield on their physical valuation, the executives restored the lines to a prime condition of efficiency and greatly augmented their rolling stock and other facilities.

Now that solid foundation of legislation is threatened. It is threatened by Congress just at the moment when executives and investors appear to have reached a position to secure some long-denied profits. Whether or not Robert M. La Follette, commonly felt to be the archfoe of the railroads, can or can not achieve the chairmanship of the Interstate Commerce Committee in the new Senate, the Esch-Cummins Act is likely to be seriously questioned, if not altered, and the whole basis of railroad prosperity undermined.

There has grown up a widespread popular belief that the Federal Government blundered into guaranteeing the railroads of the country a

six per cent. profit. Such is not the case, as President Coolidge pointed out in his message to Congress.

The Esch-Cummins Act does not guarantee railroad earnings. It merely requires, in the words of the President, "that rates should be just and reasonable. . . . To make a rate which does not yield a fair return results in confiscation, and confiscatory rates are of course unconstitutional. Unless the Government adheres to the rule of making a rate that will yield a fair return it must abandon rate making altogether."

For the six months immediately following the handing back of the roads to private ownership, the law did guarantee earnings equal to those under Federal control for a like period. Thereafter, however, there has been no guarantee.

In the exercise of its rate-making power the Interstate Commerce Commission is abjured by law to fix rates for freight and passengers, which, with honest and capable administration, will produce a fair profit for the owners. For the first two years the law set a limit of 512 per cent. upon this profit. After that the Commission itself established 534 per cent. as the limit. Is this after all a guarantee?

"If the law could be made to work out exactly," remarks the Omaha World-Herald, "if the Commission had such wisdom and such foresight that it could establish the precise freight and passenger charges that would bring in a net profit of 534 per cent., or if provision were made for recouping the railroads out of the public treasury or otherwise for any deficit, then it would literally be true that their earnings were guaranteed by law. But the Interstate Commerce Commission is not all-wise. . . . Every year since the law was passed has witnessed a failure of the railroads, as a whole, to earn the profits permitted them by law. . . . They earned in 1921 3.33 per cent. on the value of their properties as fixed