Keep them? That would not answer its purpose, because the Government wants cash, not securities.

Sell them? Who is to buy them when everyone's funds are depleted?

If they conscript a certain percentage of a man's real estate or mine or farm or factory, how is that to be expressed and converted into cash?

Are conscripted a.s.sets to be used as a basis for the issue of Federal Reserve Bank Notes? That would mean gross inflation with all its attendant evils, dangers and deceptions.

Would they repudiate a percentage of the National Debt? Repudiation is no less dishonourable in a people than in an individual, and the penalty for failure to respect the sanct.i.ty of obligations is no different for a nation than for an individual.

The fact is that the Government would gain nothing in the process of capital conscription and the country would be thrown into chaos for the time being. The man who has saved would be penalized; he who has wasted would be favoured. Thrift and constructive effort, resulting in the needful and fructifying acc.u.mulation of capital, would be arrested and lastingly discouraged.

I can understand the crude notion of the man who would divide all possessions equally. There would be mighty little coming to anyone by such distribution and it is, of course, an utterly impossible thing to do, but it is an understandable notion. But by the confiscation of capital for Government use neither the Government nor any individual would be benefited.

A vigorously progressive income tax is both economically and socially sound. A capital tax is wholly unsound and economically destructive.

It may nevertheless become necessary in the case of some of the belligerent countries to resort to this expedient, but I can conceive of no situation likely to arise which would make it necessary or advisable in this country. More than ever would such a tax be harmful in times of war and post-bellum reconstruction, when beyond almost all other things it is essential to stimulate production and promote thrift, and when everything which tends to have the opposite effect should be rigorously rejected as detrimental to the Nation's strength and well-being.

There is an astonishing lot of hazy thinking on the subject of the uses of capital in the hands of its owners. The rich man can only spend a relatively small sum of money unproductively or selfishly. The money that it is in his power to actually waste is exceedingly limited. The bulk of what he has must be spent and used for productive purposes, just as would be the case if it were spent by the Government, with this difference, however, that, generally speaking, the individual is more painstaking and discriminating in the use of his funds and at the same time bolder, more imaginative, enterprising and constructive than the Government with its necessarily bureaucratic and routine regime possibly could be. Money in the hands of the individual is continuously and feverishly on the search for opportunities, _i. e._ for creative and productive use. In the hands of the Government it is apt to lose a good deal of its fructifying energy and ceaseless striving and to sink instead into placid and somnolent repose.

Taxation presupposes earnings. Our credit structure is based upon values, and values are largely determined by earnings. Shrinkage of values necessarily affects our capacity to provide the Government with the sinews of war.

There need not be and there should not be any conflict between profits and patriotism. I am utterly opposed to those who would utilize their country's war as a means to enrich themselves. Extortionate profits must not be tolerated, but, on the other hand, there should be a reasonably liberal disposition towards business and a willingness to see it make substantial earnings. To deny this is to deny human nature.

Men will give their lives to their country as a matter of plain and natural duty; men, without a moment's hesitation, will quit their business and devote their entire time and energy and effort to the affairs of the Nation, as a great many have done and every one of us stands ready to do, without any thought of compensation. But, generally speaking, men will not take business risks, will not venture, will not be enterprising and constructive, will not take upon themselves the responsibilities, the chance of loss, the strain, the wear and tear and worry and care of intense business activity if they do not have the prospect of adequate monetary reward, even though a large part of that reward is taken away again in the shape of taxation.

IV

Reverting now to the subject of the conscription of men, I know I speak the sentiment of all those beyond the years of young manhood when I say that there is not one of us worthy of the name of a man who would not willingly go to fight if the country needed or wanted us to fight. But the country does not want or call its entire manhood to fight. It does not even call anywhere near its entire young manhood.

It has called, or intends to call in the immediate future, perhaps 25 per cent. of its men between 20 and 30 years of age, which means probably about 4 per cent. of its total male population of all ages.

In other words, it calls only for such number of men as appears indicated by the needs of the country, and as corresponds to a prudent estimate of the task before it.

I am far from meaning to compare the loss of income or profits with the risk of life or health to which men in the firing line are exposed, or to compare financial sacrifices to those willingly and proudly borne by the youth of our land and shared by those near and dear to them. But I do believe it to be a just contention--not in the interest of the individual, but of the welfare of the community--that the same principle which is applied in the case of the conscription of men should hold good for the conscription of income or profits; _i. e._ so much thereof should be taken by the State as is required by a prudent estimate of the task before it and as best promotes the accomplishment of that task, bearing in mind that the preservation of the country's economic power is next in importance for winning the war to its military power. Vindictiveness, extremist theories and demagogism ought to have no place in arriving at that estimate.

I have no patience with or tolerance for the "war profiteer," as the term is understood. The "war hog" is a nuisance and an ignominy. He should be dealt with just as drastically as is possible without doing damage to national interests in the process. But neither have I patience with or tolerance for the man who would use his country's war as a means to promote his pet theories or his political fortunes at the expense of national unity at a time when we should all be united in mutual goodwill and co-operative effort.

And if we do talk about the formula, "conscription of men--conscription of wealth," let it be understood that we have called less than 5 per cent. of the Nation's entire male population, but have called from incomes, business profits and other imposts falling princ.i.p.ally on the well-to-do, approximately 90 per cent. of our war taxation, not to mention the contribution to the Red Cross, the Y.M.C.A. and other war relief activities.

Let me add in pa.s.sing that _the children of the well-to-do have been taken for the war in proportionately greater numbers than the children of the poor_, because those young men who are needed at home to support dependents or to maintain essential war industries are exempted from the draft.

Moreover, to an overwhelming degree the sons of the well-to-do have not waited to be conscripted. They have volunteered in ma.s.ses--a far greater percentage of them than those in less advantageous circ.u.mstances. That is merely as it should be. Having greater advantages, they have corresponding duties. Not having dependents to take care of, they can better afford to volunteer than those less fortunately situated.

But the patriotic zeal of the sons of the well-to-do in coming forward to offer their lives to the country does give a doubly false and sickening sound to the ranting of the agitator who would arouse cla.s.s hatred--who calls this "a rich man's war and a poor man's fight"

when an overwhelming percentage of the sons of the men of means have eagerly and freely offered themselves for military service, when _the draft exemption regulations, discriminate not, as in former wars, in favour of the rich man's son but in favour of the poor woman's son_, and when capital and business pay more than four-fifths of our war taxation directly and a large share of the remaining one-fifth indirectly.

I do not say all this to plead for a reduction of the taxation on wealth, or in order to urge that no additional taxes be imposed on wealth if need be. There is no limit to the burden which, in time of stress and strain, those must be willing to bear who can afford it, except only that limit which is imposed by the consideration that taxation must not reach a point where the business activity of the country becomes crippled, and its economic equilibrium is thrown out of gear, because that would harm every element of the commonwealth and diminish the war-making capacity of the Nation.

V

The question of the individual is not the one that counts. The question is not what sacrifices capital should and would be willing to bear if called upon, but what taxes it is _to the public advantage_ to impose.

Taxation must be sound and wise and scientific, and cannot be laid in a haphazard way or on impulse or according to considerations of politics. Otherwise, the whole country will suffer. History has shown over and over again that the laws of economics cannot be defied with impunity and that the resulting penalty falls upon all sections and cla.s.ses.

I realize but too well that the burden of the abnormally high cost of living, caused largely by the war, weighs heavily indeed upon wage earners and still more upon men and women with moderate salaries. I yield to no one in my desire to see everything done that is practicable to have that burden lightened. But excessive taxation on capital will not accomplish that; on the contrary, it will rather tend to intensify the trouble.

We men of business are ready and willing to be taxed in this emergency to the very limit of our ability, and to make contributions to war relief work and other good causes, without stint. The fact is that, generally speaking, capital engaged in business is now being taxed in America more heavily than anywhere else in the world. We are not complaining about this; we do not say that it may not become necessary to impose still further taxes; we are not whimpering and squealing and agitating, but--we do want the people to know what are the present facts, and we ask them not to give heed to the demagogue who would make them believe that we are escaping our share of the common burden.

May I hope that I have measurably succeeded in demonstrating that the allegations with which the propagandists of disunion have been a.s.sailing the public mind are without foundation in fact. And may I add, in conclusion, that the charge of "big business" having fomented our entrance into the war is one which, apart from its intrinsic absurdity, is a hateful calumny. Business men, great or small, are no different from other Americans, and we reject the thought that any American, rich or poor, would be capable of the hideous and dastardly plot to bring upon his country the sorrows and sufferings of war in order to enrich himself.

Business men are bound to be exceedingly heavy financial losers through America's entrance into the war. Every element of self-interest should have caused them to use their utmost efforts to preserve America's neutrality from which they drew so much profit during the two and a half years before April, 1917. Every consideration of personal advantage commanded men of affairs to stand with and support the agitation of the "peace-at-any-price" party. They spurned such ign.o.ble reasoning; they rejected that affiliation; they stood for war when it was no longer possible, with safety and honour, to maintain peace, because they are patriotic citizens first and business men afterwards.

The insinuation that "big business" had any share in influencing our Government's decision to enter the war is an insult to the President and Congress, a libel on American citizenship, and a malicious perversion or ignorant misconception of the facts. Those who continue to circulate that insinuation lay themselves open to just suspicion of their motives and should receive neither credence nor tolerance.

LETTER TO A GERMAN

_PUBLISHERS' EXPLANATORY NOTE_

Some months ago a leading American lawyer, while visiting Paris, was discussing with a group of prominent Frenchmen the att.i.tude and sympathies of various Americans towards the nations engaged in the European War.

The discussion turned toward the disposition of Mr. Y. of New York.

Some one said that he a.s.sumed that his sympathies and views were pro-German, because of his German ancestry and his business connections in Germany.

"Oh, no," spoke up one of the distinguished Frenchmen present. "I happen to know the contrary to be the fact, because some time ago I saw a long and comprehensive letter from Mr. Y. to a relative in Germany, in which he showed not only p.r.o.nounced sympathy for the Allies, but a thorough understanding of their cause, and scathingly arraigned the German Government and policy."

It appears that this letter had been singled out in the operation of the censorship of letters between the United States and Germany and had been brought to the attention of official representatives of the Allied Governments. It should be noted that at the time the letter was written, namely in the early part of 1915, the censorship of letters between the United States and Germany had not yet been officially established, and it was believed that only correspondence from and to suspected persons and firms was being opened, and the writer had no reason to expect that this particular letter would come under the scrutiny of the censor.

The American lawyer, upon returning to New York, related to Mr. Y. the incident of the conversation and asked to be allowed to read a copy of the letter in question. Having perused it, he urged Mr. Y. to have it printed. In accordance with the suggestion, the letter, together with the correspondence which preceded it, is reprinted in the following pages.

This letter was written in June, 1915, to a prominent business man in Germany. A few of the pa.s.sages contained in the letter as here given are taken from an earlier letter (March, 1915) written to the same person.

The original letters were in German. The following translation was made by the author.

It is needless to inform the reader as to the ident.i.ty of Mr. Y.

August, 1918.

LETTER TO A GERMAN

_New York_, _June_ 28, 1915.