"We are now passing through a nerve-wearing time because of our difficulty with Serbia, but by the time this letter reaches you everything will be all right again. The Serbians have been intriguing against us these many years, and this time they must be settled with for good and all. We shall go in and take Belgrade, but inasmuch as we have given assurance to Russia that we shall not permanently interfere with the integrity and independence of Serbia, and inasmuch as neither Russia nor her allies are ready to fight, the whole thing will be a military promenade and will have no serious consequences."
"We are now passing through a nerve-wearing time because of our difficulty with Serbia, but by the time this letter reaches you everything will be all right again. The Serbians have been intriguing against us these many years, and this time they must be settled with for good and all. We shall go in and take Belgrade, but inasmuch as we have given assurance to Russia that we shall not permanently interfere with the integrity and independence of Serbia, and inasmuch as neither Russia nor her allies are ready to fight, the whole thing will be a military promenade and will have no serious consequences."
A defensive war! Was it a defensive war which Prussianism was thinking of when it declined England's repeated offer for a reduction by both countries of the building of warships; when it refused at the last Hague conference to discuss the limitation of standing armies and armaments; when Germany—alone amongst the great nations—rejected our offer of a treaty of arbitration?
Years before the war, Nietzsche, than whom no man had greater influence in shaping the trend of German thought in the past thirty years, wrote:
"You shall love peace as a means to prepare for new wars. You say that a good cause may hallow even war, but I say to you that it is a good war which hallows every cause."
"You shall love peace as a means to prepare for new wars. You say that a good cause may hallow even war, but I say to you that it is a good war which hallows every cause."
On July 29, 1914, the well-informed German newspaper,Vorwaerts, declared:
"The camarilla of war-lords is working with absolutely unscrupulous means to carry out their fearful designs to precipitate a world war."
"The camarilla of war-lords is working with absolutely unscrupulous means to carry out their fearful designs to precipitate a world war."
In October, 1914, three months afterthe outbreak of the war, Maximilian Harden, one of the ablest and most influential of German publicists, wrote:
"Let us renounce those miserable efforts to excuse the actions of Germany in declaring war. It is not against our will that we have thrown ourselves into this gigantic adventure. The war has not been imposed upon us by others and by surprise. We have willed the war. It was our duty to will it. We decline to appear before the tribunal of united Europe. We reject its jurisdiction. One principle alone counts and no other—one principle which contains and sums up all the others—might."
"Let us renounce those miserable efforts to excuse the actions of Germany in declaring war. It is not against our will that we have thrown ourselves into this gigantic adventure. The war has not been imposed upon us by others and by surprise. We have willed the war. It was our duty to will it. We decline to appear before the tribunal of united Europe. We reject its jurisdiction. One principle alone counts and no other—one principle which contains and sums up all the others—might."
I could go on for hours quoting similar views and sentiments from the utterances of leading German writers and educators before and since the war. It is worth mentioning, though, that Maximilian Harden has seen a new light, and for some time has been courageously speaking and writing in a very different strain. There are a number of influential men in Germany who, like him, have undergone a change of mind and heart. Strong and outspoken assertions of liberal sentiment and independent aspirations have found utterancein that country in the course of the last six months, such as have not been heard within its frontiers these many years.
A defensive war! There are certain telegrams (generally unknown in Germany, even to this day) from Sir Edward Grey, the British Minister for Foreign Affairs, to the British Ambassador in Germany, sent during the week preceding the outbreak of the war in Europe, which by themselves are conclusive testimony to the contrary. In these messages, the British Foreign Minister went almost on his knees to beg Germany to consent to a conference in order to avoid war.
He went to the utmost limits in promising benevolent consideration for Germany's view-point and wishes, then and in the future, and he stated that if Germany would put forward any reasonable proposition honestly calculated to maintain peace, England would support it with all of its influence, and if France and Russia would not fall in line England would promptly separate itself from these two countries.
These overtures and pleas met with no response from the Masters of Germany. They declared war.
It is probably true that the Russian Pan-Slavists had planned war sooner or later, just as the Pan-Germans did. War mightperhapshave come then or at some other time, even if the Prussian rulers had not precipitated it. But the fact remains that it was the Imperial German Government whichdiddeclare war. For having anticipated that "perhaps," and resolved it according to their own plans and wishes, for that, their initial crime, and for those which followed, the rulers of the German people will have to answer before the judgment seat of God and history. Upon them rests the blood-guilt for this dreadful catastrophe which has befallen the world.
A few days ago I read a poem addressed to Germany, of which these lines have remained in my memory:
"Oh, land of now, oh, land of then,Dear God, the dreams, the dreams of men!Enslaved, immersed in greed and hate,Where are the things which made you great?"
"Oh, land of now, oh, land of then,Dear God, the dreams, the dreams of men!Enslaved, immersed in greed and hate,Where are the things which made you great?"
The things which made Germany great are not dead, and the world cannot afford to allow them to die. They belong to the immortal possessions of the human race.
They have passed, for the time being, alas, out of the keeping of the mass of the German people, whose glorious inheritance they were.
They are now in the keeping of that minority, not, perhaps, very great as yet, but growing steadily, of men in Germany itself from whose eyes the scales have begun to fall. They are in the keeping of all the nations who appreciate and cherish and are determined to maintain those great and high things which the civilized world has attained through the toil, sacrifice and suffering of its best in the course of many centuries. And, above all, they are in the keeping of the ten or fifteen millions of Americans of German descent.
As that great American of German birth, Carl Schurz, and many other brave and high-minded Germans—my own father, I am proud to say, among them—in 1848 stood in arms against Prussian oppression, for liberal ideas and right and truth and freedom, so do we stand now. In fighting for the cause of America as loyal Americans, we are fighting at the same time for the deliverance of the country of our birth from those unrighteous powers which hold it enthralled and feed upon its soul.
If ever a nation entered a war after having maintained infinite forbearance in the face of grave menace and dangers and the most intolerable affronts, and from motives as pure and high as the great blue dome of heaven, America is that nation.
We seek no reward whatsoever of a material nature. We seek no "place in the sun"—to use the German Chancellor's term—except the sun of liberty, and that we do not seek selfishly, but to share with all the world.
America is not waging a war of vengeance, notwithstanding all the injuries and measureless provocations that we have received. We have lighted a fire to purify, not to burn at the stake.
America is incapable of hating an entire people, but we do hate, we are fighting and we shall fight with every ounce of our might, the spirit which has power over the people of Germany, and which, if it were to prevail—as, under God, it never will—would destroy liberty, justice and plighted faith. It was not the people of Great Britain which America fought in the War of the Revolution, but the spirit and the ruling caste which then held sway over them. America fought then for an ideal and for liberty and independence, and sacrificed blood and treasure and suffered and endured and won. And so it will be now.
The spirit of Prussianism and the spirit of Americanism cannot live in the same world. One or the other must conquer.
In the mad pride of its contempt for democracy, Prussianism has thrown downthe gauntlet to us. We have taken up the challenge and now stand arrayed by the side of the other freedom-loving nations of the world, giving our fresh strength and our boundless resources to them, who, heroically striving, have borne the heat and burden of a dreadfully long and exhausting struggle, yet stand unwearied, erect and resolute.
The enemy is of formidable strength. But even if he were far stronger than he is, even if we did not have the men and the means which are ours, even if our comrades-in-arms had not demonstrated their superb and indomitable prowess, still must our cause prevail—for there is fighting with us a force which has ever proved itself stronger than any other power on earth, and again and again has triumphed over overwhelming odds. That force, God-inspired, death-defying and unconquerable, is the soul of man.
And when—Heaven grant it may be soon!—the soul of the German people will have freed itself from the sinister powersthat now keep it in ban and bondage, when it will have found again the high impulses and aims of its former self, when it will once more understand and speak the universal language of humanity and right, then, in God's own time there will be peace.
Extracts from Address given at the University of Wisconsin, January 14, 1918
We are engaged in a war, an "irrepressible conflict," a most just and righteous war for a cause as high and noble as ever inspired a people to put forth its utmost of sacrifice and valour. To attain the end for which this peace-loving nation unsheathed its sword, to lay low and make powerless the accursed spirit which brought all this unspeakable misery, sorrow and ruin upon the world, is our one and supreme and unshakable purpose.
That is the purpose of the people of Wisconsin as it is the purpose of the people of New York and of every other State in the Union. I give no credence to and have no patience with those who wouldmeasure as with a thermometer the loyalty temperature of our communities.
Some dreamers there may be, here as everywhere, so immersed in their dreams that the trumpet call of the day has not yet awakened them.
Some politicians there may be, here and elsewhere, so obsessed by the issues which heretofore were good election assets and so unable to shake off the inveterate habits and the formulas and calculations of a lifetime, that they are unable to recognize and to share in the sudden flaming manifestations springing from the deep of the people's soul—and after a while, looking around for their usual followers, find themselves in chilly loneliness.
Some there are, a small minority always and getting smaller every day, among Americans of German birth or descent who lack the vision to see their duty or the strength to follow it, and who stand irresolute, hesitant and dazed.
The vast and overwhelming majority have acted like true men and loyal Americans. They are entitled to claim your sympathetic understanding for the heartache which is theirs and they are entitled to claim your trust. It will not be misplaced.
I am taking very little account of that insignificant number of men of German origin who, misguided or corrupt, dare by insidious and underground processes to attempt to weaken or oppose the resolute will of the Nation. There are too few of them to count and their manœuvres are too clumsy to be effective. But let them be warned. There is sweeping through the country a mighty wave of stern and grim determination, which bodes ill for anyone standing in its way.
One element only there is in our population which does deliberately challenge our national unity. I mean the militant Bolsheviki in our midst, the preachers and devotees of liberty run amuck, whowould place a visionary class interest above patriotism and who in ignorant fanaticism would substitute for the tyranny of autocracy the still more intolerable tyranny of mob-rule, as for the time being they have done in Russia.
If it were not for the disablement of Russia, the battle against autocracy would have been won by now. As so often before, liberty has been wounded in the house of its friends. Liberty in the wild and freakish hands of fanatics has once more, as frequently in the past, proved the effective helpmate of autocracy and the twin brother of tyranny.
Out-czaring the czar, its votaries are filling the prisons with their political opponents, are practising ruthless spoliation and savage oppression, and are maintaining their self-constituted rule by the force of bayonets. Riot, robbery, famine, fratricidal strife are stalking through the land.
The deadliest foe of democracy is not autocracy but liberty frenzied.
Liberty is not fool-proof. For its beneficent working it demands self-restraint, a sane and clear recognition of the practical and attainable and of the fact that there are laws of nature which are beyond our power to change.
Liberty can, does and must limit the rights of the strong, it must increasingly guard and promote the well-being of those endowed with lesser gifts for the struggle for existence and success, it must strive in every way consistent with sane recognition of the realities to make life more worth living to those whose existence is cast in the mould of the vast average of mankind; it must give political equality, equality before the law; it must throw wide open to talent and worth the door of opportunity.
But it must not attempt in fatuous recklessness to make over humanity on the pattern of absolute equality. If and when it does so attempt, it will fail as that attempt has always failed throughout history. For an inscrutable Providencehas made inequality of endowment a fundamental law of nature, animate as well as inanimate, and from inequality of physical strength, of brain power and of character, springs inevitably the fact of inequality of results.
Envy, demagogism, utopianism, well-meaning uplift agitation may throw themselves against that basic law of all being, but the clash will create merely temporary confusion, destruction and anarchy, as in Russia; and after a little while and much suffering, the supremacy of sanely restrained individualism over frenzied collectivism will reassert itself.
Under the system of wisely ordered liberty, combined with incentive to individual effort whereof the foundation was laid by the far-sighted and enlightened men who created this nation and endowed it with the most sagacious instrument of government that the wit of man hasdevised, America has grown and prospered beyond all other nations.
It has stood as a republic for nearly a century and a half, which is far longer than any other genuine republic has endured amongst the great nations of the world since the beginning of the Christian era. Its past has been glorious, the vista of its future is one of boundless opportunity, of splendid fruitfulness for its own people and the world, if it remains but true to its principles and traditions, adjusting their expression and application to the changing needs of the times in a spirit of progress, sympathetic understanding and enlightened justice, but rejecting the teachings and temptations of false, though plausible prophets.
More and more, of late, do we see the very foundations of that majestic and beneficent structure clamorously assailed by some of those to whom the great republic generously gave asylum and to whom she opened wide the portals of her freedom and her opportunities.
These people with many hundreds of thousands of their countrymen came to our free shores after centuries of oppression and persecution. America gave them everything she had to give—the great gift of the rights and liberties of citizenship, free education in our schools and universities, free treatment in our clinics and hospitals, our boundless opportunities for social and material advancement.
Most of them have proved themselves useful and valuable elements in our many-rooted population. Some of them have accomplished eminent achievements in science, industry and the arts. Certain of the qualities and talents which they contribute to the common stock are of great worth and promise.
But some of them there are who have shown themselves unworthy of the trust of their fellow-citizens; ingrates, disturbers, ignorant of or disloyal to the spirit of America, abusers of her hospitality.
Some there are who have been blindedby the glare of liberty as a man is blinded who, after long confinement in darkness, comes suddenly into the strong sunlight. Blinded, they dare to aspire to force their guidance upon Americans who for generations have walked in the light of liberty.
They have become drunk with the strong wine of freedom, these men who until they landed on America's coasts had tasted nothing but the bitter waters of tyranny. Drunk, they presume to impose their reeling gait upon Americans to whom freedom has been a pure and refreshing fountain for a century and a half.
Brooding in the gloom of age-long oppression, they have evolved a fantastic and distorted image of free government. In fatuous effrontery they seek to graft the growth of their stunted vision upon the splendid and ancient tree of American institutions.
We will not have it so, we who are Americans by birth or adoption. We reject these impudent pretensions. Changesthe American people will make as their need becomes apparent, improvements they welcome, the greatest attainable well-being for all those under our national roof-tree is their aim; but they will do all that in the American way of sane and orderly progress—and in none other.
Against foes within no less than against enemies without they will know how to preserve and protect the splendid structure of light and order which is the great and treasured inheritance of all those who rightly bear the name Americans, of which the stewardship is entrusted to them and which, God willing, they will hand on to their children sound and wholesome, unshaken and undefiled.
The time is ripe and over-ripe to call a halt upon these spreaders of outlandish and pernicious doctrines. The American is indulgent to a fault and slow to wrath. But he is now passing through a time of tension and strain. His teeth are set and his nerves on edge. He sees more closely approaching every day the dark valleythrough which his sons and brothers must pass and from which too many, alas, will not return. It is an evil time to cross him. He is not in the temper to be trifled with. He is apt very suddenly to bring down the indignant fist of his might upon those who would presume on his habitual mood of easy-going good nature.
When I speak of the militant Bolsheviki in our midst as foes of national unity I mean to include those of American stock who are their allies, comrades or followers—those who put a narrow class interest and a sloppy internationalism above patriotism, with whom class hatred and envy have become a consuming passion, whom visionary obsessions and a false conception of equality have inflamed to the point of irresponsibility. But I am far from meaning to reflect upon those who, while determined Socialists, are patriotic Americans.
I believe the Socialistic state to be an impracticable conception, a utopian dream, human nature being what it is, and theimmutable laws of nature being what they are. But there is not a little in Socialistic doctrine and aspirations that is high and noble; there are things, too, that are achievable and desirable.
And to the extent that Socialism is an antidote to and a check upon excessive individualism and holds up to a busy and self-centred and far from perfect world, grievances to be remedied, wrongs to be righted, ideals to be striven for, it is a force distinctly for good.
Still less do I mean to reflect upon the labour union movement, which I regard as an absolutely necessary element in the scheme of our economic life. Its leaders have acted with admirable patriotism in this crisis of the Nation, and on the whole have been a factor against extreme tendencies and irrational aspirations.
Trades unions have not only come to stay, but they are bound, I think, to become an increasingly potent factor in our industrial life. I believe that the most effective preventive against extreme StateSocialism is frank, free and far-reaching co-operation between business and trades unions sobered and broadened increasingly by enhanced opportunities, rights and responsibilities.
And I believe that a further and highly important element which can be counted upon in this country to stand against extreme and destructive tendencies is the bulk of the men and women who are engaged in the nation's greatest and most vital interest, agriculture, provided that the persistent agitation of the demagogue among the farming population is adequately met and that due and timely heed and satisfaction are given to their just requirements and aspirations.
Business must not deal grudgingly with labour. We business men must not look upon labour unrest and aspirations as temporary "troubles," as a passing phase, but we must give to labour willing and liberal recognition as partner with capital.We must under all circumstances pay as a minimum a decent living wage to everyone who works for a living. We must devise means to cope with the problem of unemployment and to meet the dread advent of sickness, incapacity and old age in the case of those whose means do not permit them to provide for a rainy day.
We must bridge the gulf which now separates the employer and the employee, the business man and the farmer, if the existing order of civilization is to persist. We must welcome progress and seek to further social justice. We must translate into effective action our sympathy for and our recognition of the rights of those whose life, in too many cases, is now a hard and weary struggle to make both ends meet, and who too often are oppressed by the gnawing care of how to find the wherewithal to provide for themselves and their families. We must, by deeds, demonstrate convincingly the genuineness of our desire to see their burden lightened.
We must all join in a sincere and sustained effort towards procuring for themasses of the people more of ease and comfort, more of the rewards and joys of life than they now possess. I believe this is not only our duty but our interest, because if we wish to preserve the fundamental lines of our present social system we must leave nothing practicable undone to make it more satisfactory and more inviting than it is now to the vast majority of those who toil. And I do not mean those only who toil with their hands, but also the professional men, the men and women in modest salaried positions, in short, the workers in every occupation.
Even before the war, a great stirring and ferment was going on in the land. The people were groping, seeking for a new and better condition of things. The war has intensified that movement. It has torn great fissures in the ancient structure of our civilization. To restore it will require the co-operation of all patriotic men of sane and temperate views, whatever may be their occupation or calling or political affiliations.
It cannot be restored just as it wasbefore. The building must be rendered more habitable and attractive to those whose claim for adequate house-room cannot be left unheeded, either justly or safely. Some changes, essential changes, must be made.
I have no fear of the outcome and of the readjustment which must come. I have no fear of the forces of freedom unless they be ignored, repressed, or falsely and selfishly led.
But this is not the time for settling complex social questions. When your house is being invaded by burglars you do not discuss family questions. Let us win the war first. Nothing else must now be permitted to occupy our thoughts and divert our aims.
When we shall have attained victory and peace, then will be the time for us to sit down and reason together and make such changes in political and social conditions as, after full and fair discussion, free from heat and passion, the enlightened public opinion of the country deems requisite.
Since Pacifism and semi-seditious agitation have become both unpopular and risky, the propagandists of disunion have been at pains in endeavouring to insidiously affect public sentiment by spreading the fiction that America's entrance into the war was fomented by "big business" from selfish reasons and for the purpose of gain. In the same line of thought and purpose they proclaim that this is "a rich man's war and a poor man's fight," and that wealth is being taxed here with undue leniency as compared to the burden laid upon it in other countries.
These assertions are in flat contradiction to the facts.
Nothing is plainer than that business and business men had everything to gain by preserving the conditions which existed during the two and a half years prior to April, 1917, under which many of them made very large profits by furnishing supplies, provisions and financial aid to the Allied nations, taxes were light and this country was rapidly becoming the great economic reservoir of the world.
Nothing is plainer than that any sane business man in this country must have foreseen that if America entered the war these profits would be immensely reduced, and some of them cut off entirely, because our Government would step in and take charge; that it would cut prices right and left, as in fact it has done; that enormous burdens of taxation would have to be imposed, the bulk of which would naturally be borne by the well-to-do; in short, that the unprecedented golden flow into the coffers of business was bound to stop with our joining the war; or, at any rate, to be much diminished.
The best indication of the state of feeling of the financial community is usually the New York Stock Exchange. Well, every time a ship with Americans on board was sunk by a German submarine in the period preceding our entrance into the war, the stock market shivered and prices declined.
When, a little over a year ago, Secretary Lansing declared that we were "on the verge of war," a tremendous smash in prices took place on the Stock Exchange. That does not look, does it, as if rich men were particularly eager to bring on war or cheered by the prospect of having war?
But, it is said, the big financiers of New York were afraid that the money loaned by them to the Allied nations might be lost if these nations were defeated, and therefore they manœuvred to get America into the war in order to save their investments. A moment's reflection will show the utter absurdity of that charge.
American bankers have loaned to the Allied nations—almost entirely to the twostrongest and wealthiest among them, France and England—about two billions of dollars since the war started in 1914.
These two billions of dollars of Allied bonds are not held, however, in the coffers of Eastern bankers, but have been distributed throughout the country and are being owned by thousands of banks and other corporations and individuals.
Moreover, they form an insignificant portion of the total debts of the Allied nations; they are offset a hundredfold by their total assets. Even if those nations were to have lost the war it is utterly inconceivable that they would ever have defaulted upon that particular portion of their debt, because, being theirforeigndebt, it has a special standing and intrinsic security.
It is upon the punctual payment of its foreign obligations that a nation's credit in the markets of the world largely depends, and the maintenance of their world credit was and is absolutely vital to England and France. Furthermore,the greater portion of these obligations is secured by the deposit of collateral in the shape of American railroad and other bonds, etc., which are more than sufficient in value to cover the debt.
But let us assume for argument's sake that the Allies had been defeated and had defaulted, for the time being, upon these foreign debts; let us assume that the entire amount of Allied bonds placed in America had been held by rich men in New York and the East instead of being distributed, as it is, throughout the country. Why, is it not perfectly manifest that a single year's American war taxation and reduction of profits would take out of the pockets of such assumed holders a vastly greater sum than any possible loss they could have suffered by a default on their Allied bonds, not to mention the heavy taxation which is bound to follow the war for years to come and the shrinkage of fortunes through the decline of all American securities in consequence of our entrance into the war?
Is it not perfectly manifest to the meanest understanding that any business man fomenting our entrance into the war for the purpose of gain must have been entirely bereft of his senses and would have been a fit subject for the appointment of a guardian to take care of himself and his affairs?
Now as to the allegations concerning taxation.
1. The largest incomes are taxed far more heavily here than anywhere else in the world.
The maximum rate of income taxation here is 67 per cent. In England it is 42½ per cent. Ours is therefore 50 per cent. higher than England's and the rate in England is the highest prevailing anywhere in Europe. Neither republican France nor democratic England—containing in their cabinets Socialists and representatives of labour—nor autocratic Germany have an income tax rate anywhere near as high as our maximum rate. And in addition to the federal tax we must bear in mind our state and municipal taxes.
2. Moderate and small incomes, on the other hand, are subject to a far smaller rate of taxation here than in England.
In America, incomes of married men up to $2,000 are not subject to any federal income tax at all.
(These are the rates if the income is derived from salaries or wages; they are still higher if the income is derived from rents or investments.)
The English scale of taxation on incomes of, say, $3,000, $5,000, $10,000 and $15,000, respectively averages as follows, as compared to the American rates for married men:
(If we add the so-called "occupational" tax, our total taxation on incomes of $10,000 is 6¾ per cent., and on incomes of $15,000, 9¾ per cent.)
In other words, our income taxation is more democratic than that of any other country, in that the largest incomes are taxed much more heavily, and the small and moderate incomes much more lightly than anywhere else, and incomes up to $2,000 for married men not taxed at all.
3. It is true, on the other hand, that on very large incomes as distinguished from the largest incomes, our income tax is somewhat lower than the English tax, but the difference by which our tax is lower than the English tax is incomparably more pronounced in the case of small and moderate incomes than of large incomes.Moreover, if we add to our income tax our so-called excess profit tax, which is merely an additional income tax on earnings derived from business, we shall find that the total tax to which rich men are subject is in the great majority of cases heavier here than in England or anywhere else.
4. It is likewise true that the English war excess profit tax is 80 per cent. (less various offsets and allowances) whilst our so-called excess profit tax ranges from 20 per cent. to 60 per cent.
But it is entirely misleading to base a conclusion as to the relative heaviness of the American and British tax merely on a comparison of the rates, because the English tax is assessed on a wholly different basis from the American tax. As a matter of fact, Congress has estimated that the 20 per cent. to 60 per cent. tax on the American basis will produce approximately the same amount in dollars and cents as the 80 per cent. tax is calculated to produce in England. (I know Ishall be answered that we have twice the population of England and twice the wealth. But it must be borne in mind that a far larger proportion of our wealth is represented by farms and other non-industrial property, and that a far larger proportion of our people than of the British people are engaged in agricultural pursuits which are not affected by the excess profit tax. I believe it will be found that the total wealth employed in business in America is not so greatly superior to the total wealth similarly employed by Great Britain.)
The American excess profit law so called taxes all profits derived from businessover and above a certain moderate percentage, regardless of whether or not such profits are the result of war conditions. The American tax is a general tax on income derived from business, in addition to the regular income tax.The English tax applies only to excess war profits; that is, only to the sum by which profits in the war years exceed the average profits onthe three years preceding the war, which in England were years of great prosperity.
In other words, the English tax is nominally higher than ours, but it applies only to war profits. The normal profits of business,i. e.the profits which business used to make in peace time, are exempted in England.There, only the excess over peace profits is taxed. Our tax, on the contrary, applies to all profitsover and above a very moderate rate on the money invested in business.
In short, our law-makers have decreed that normal business profits are taxed here much more heavily than in England, while direct war profits are taxed less heavily. You will agree with me in questioning both the logic and the justice of that method. It would seem that it would be both fairer and wiser and more in accord with public sentiment if the tax on business in general were decreased and, on the other hand, an increased tax were imposed on specific war profits.
5. Our federal inheritance tax is farhigher than in England or anywhere else. The maximum rate here on direct descendants is 27½ per cent. as against 20 per cent. in England. In addition we have State inheritance taxes which do not exist in England.
Much is being said about the plausible sounding contention that because a portion of the young manhood of the Nation has been conscripted, therefore money also must be conscripted. Why, that is the very thing the Government has been doing. It has conscripted a portion, a relatively small portion, of the men of the Nation. It has conscripted a portion, a large portion, of the incomes of the Nation. If it went too far in conscripting men, the country would be crippled. If it went too far in conscripting incomes and earnings, the country would likewise be crippled.
Those who would go further and conscript not only incomes but capital, Iwould ask to answer the riddle not only in what equitable and practicable manner they would do it,[1]but what the Nation would gain by it?
[1]It is true that a few years ago a capital levy was made in Germany, but the percentage of that levy was so small as to actually amount to no more than an additional income tax, and that at a time when the regular income tax in Germany was very moderate as measured by the present standards of income taxation.
[1]It is true that a few years ago a capital levy was made in Germany, but the percentage of that levy was so small as to actually amount to no more than an additional income tax, and that at a time when the regular income tax in Germany was very moderate as measured by the present standards of income taxation.
Only a trifling fraction of a man's property is held in cash. If they conscript a certain percentage of his possessions in stocks and bonds, what would the Government do with them?
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 assets to be used as abasis 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 sanctity 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 accumulation 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 hazythinking 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.
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 theaccomplishment 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 havecalled from incomes, business profits and other imposts falling principally 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 passing thatthe 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 masses—a far greater percentage of them than those in less advantageous circumstances. 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 ofthe 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 class 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, whenthe 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 thebusiness 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.
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 isto the public advantageto 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 classes.
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 believethat 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 assailing 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 twoand 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 ignoble 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.
Some months ago a leading American lawyer, while visiting Paris, was discussing with a group of prominent Frenchmen the attitude 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 assumed 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 pronounced 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 passages 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 identity of Mr. Y.
August, 1918.
New York,June28, 1915.
Dear X.:
Many thanks for your very interesting letter of April 27th. The spirit which animates Germany is indeed a great and mighty one. It is a spirit of unity and brotherhood among her people, of willing sacrifice and heroic striving, coupled with the passionate conviction and faith that her cause is just and righteous, that it must and will win, and that not only is victory a necessity for national existence, but that in its train it will bring blessings to the whole of the universe.
Wherever and whenever in the world's history such a spirit—born of the stirring of the profoundest depths of national orreligious feeling—has manifested itself, it has invariably been attended by a more or less marked fanaticism among the people concerned; by a condition of mind easily comprehensible as a psychological phenomenon, yet acutely prejudicial to the ability to preserve an objective point of view, and to arrive at an impartial judgment.
It is but natural that in the atmosphere which surrounds you and under existing circumstances, a man even of such sober, clear and independent mentality as yourself should think and feel in the way manifested by your letter. Even if it were in my power, I would not tryat this timeto shake your faith and patriotic determination. Since, however, you ask me to continue this exchange of opinions, I will endeavour further to make plain to you my ideas as to this most deplorable and accursed war.
The views I am expressing are, I believe, the views as well of the great majority of thinking people in America. And Iwould remind you that America as a whole, by reason of the racial composition of her population, is essentially free from national prejudice or racial bias. With her many millions of inhabitants of German origin, her disposition could not be anti-German in the ordinary course of affairs—and indeed never was so before the war.
With her millions of Jews and her liberal tendencies she cannot be pro-Russian. With her historical development in the course of which her only serious wars have been fought against Great Britain (which country, moreover, during certain critical periods in the Civil War between North and South, evidenced inclination to favour the South and thus aroused long continuing resentment in the Northern States), and for many other reasons, her disposition cannot be that of an English partisan—and was not so before the war.
The predominant sentiment of the American people in the Boer War was anti-English; in the Balkan War theirsympathies were pro-Turkish; in the Italian-Turkish War, anti-Italian; in the Russo-Japanese War, pro-Japanese, although it was fully realized that from the point of view of America's material and national interests, the strengthening of Japan was hardly desirable.
It may sound to you very improbable, yet it is none the less true that America, of all the great nations, is probably the one least swayed by eagerness to attain material advantage for herself through her international policies. I do not claim that this arises necessarily from any particular virtue in her people. It may be rather the result of her geographical and economic situation.
America returned to China the indemnity growing out of the Boxer Rebellion. To Spain, conquered and helpless, she paid, entirely of her own free-will, $20,000,000 for the Philippines. She refused to annex Cuba. In spite of strong provocation she abstained from taking Mexico.
Although not a land as yet of the highest degree of culture, America is a land of high and genuine humanitarianism and of a certain naïve idealism.
I hear your ironic rejoinder, "and out of pure humanitarianism, you supply arms to our enemies, andthus prolong the war."
The answer lies in the accentuation of the last four words, which can only mean that, but for the American supply of arms, the Allies, from lack of ammunition, would speedily be defeated,i. e.America is to co-operate in preserving for that country which has most extensively and actively prepared for war, the full and lasting advantage of that preparation.
That would put a premium on war preparations—on an armed and therefore necessarily precarious peace—since it is but human nature that, given a difference which he considers serious enough for ground for a quarrel, a man armed to the teeth would be less inclined to settle the matter peaceably than one who is not so well prepared for a fight.
Apart from this, the German complaint about the prolongation of the war through the American supply of arms is proof in itself that the refusal of such supplies would constitute a positive act of partiality in favour of Germany.
And the great majority of Americans are convinced that the ruling powers of Germany and Austria, though not perhaps the people themselves, are responsible for the outbreak of the war; that they have sinned against humanity and justice; that at least France and England did not want war; that therefore its advent found them in a comparatively unprepared state, and that it would constitute a decided, serious and unjustifiable action of far-reaching effectagainst the Alliesif America were to put an embargo on war munitions—especially so in view of the fact that as a direct consequence of the treaty-defying invasion of Belgium you are in possession of the Belgian arms factories and iron mines and of about 75 per cent. of all the ore-producing capacity of France.
For neutrals to supply war materials to belligerents is an ancient, unquestioned right, recognized by international law and frequently practised by yourselves. To alter, during the course of a war, a practice sanctioned by the law of nations and hitherto always followed, would constitute a flagrant breach of neutrality, in that it would necessarily help one side and harm the other.
The fact that at one time we forbade the export of arms to Mexico affords no argument in favour of the German contention, for there it was not a case of war between nations, but of civil war. There was also the danger that such arms might eventually be used against America herself, given the possibility that intervention by us in Mexico might later on become necessary.
Commissions from Germany for the supply of arms would have been as acceptable to our factories as were those from the Allies. It is not America's fault if the German fleet does not break through theBritish cordon and open the way for sea communication with Germany. The superiority of the British fleet and the resulting consequences must have been known to Germany before she permitted the outbreak of this horrible war. She has no more right to make a grievance of these consequences than the Allies have a right to complain of Germany's superior preparedness and the greater perfection of her instruments of war.
To believe American public opinion influenced by the profits which come to this country from the supply of arms, is to misunderstand completely the American mode of thought and feeling. Moreover these profits go to very few pockets, and public opinion here being anything but unduly complacent towards large corporations and capitalists is by no means inclined to view with favour the gathering in of these huge profits by a very limited number of individuals and concerns.
You quote with approval General von Schlieffen's remark that "in war, after all,the only thing that matters is those silly old victories."
You would surely not say that in the individual's daily struggle for existence or in competitive industrial strife, "the only thing that matters" is success. Rather you would be the first to grant, as you have always demonstrated in your acts, that there are certain ethical limitations laid down by the conscience and the moral conceptions of humanity, which must be respected in the struggle for success, however keen, even though the very existence of the individual and the maintenance of wife and child be at stake.
Schlieffen's utterance, in the meaning which your quotation gives it, throws overboard everything that civilization and the humanitarian progress of centuries has accomplished towards lessening the cruelty, the hatred and the suffering engendered by war, and towards protecting non-combatants, as far as possible, from its terrors. It is tantamount to thedoctrine of the fanatical Jesuit: "The end justifies the means."
And it is something akin to this very doctrine which Germany has made her own and applied in her conduct of this war as she has done in none of her previous wars.The conviction that everything, literally everything, which tends to ensure victory is permitted to her, and indeed called for, has now evidently assumed the power of a national obsession.Thus, the violation of innocent Belgium in defiance of solemn treaty; the unspeakable treatment inflicted on her people; the bombardment, without warning, of open places (which Germany was the first to practise); the destruction of great monuments of art which belonged to all humankind, as in Rheims, and Louvain; theLusitaniahorror, the strewing of mines broadcast, the use of poisonous gases causing death by torture or incurable disease; the taking of hostages; the arbitrary imposition of monetary indemnities and penalties, and so forth.It is these facts that the non-combatant nations charge against Germany, and quite apart from the responsibility for the war, it is in them that may be found the main reason why public opinion in neutral countries has more and more turned against Germany as the war has continued.
I say "innocent Belgium," for it is entirely evident that the Belgian-English pourparlers, of which Germany discovered documentary evidence,related merely to the eventuality of Germany's violating Belgian neutrality, and therefore in no way constituted a relinquishment of neutrality on Belgium's part.In so far as these pourparlers did not keep strictly within these limits(manifestly as a result of excessive zeal on the part of the English military attaché in question)they were formally and categorically rejected and disavowed, by both the Belgian and English Governments. This is shown by official papers which have been published. It cannot be doubted that these proceedingsof disavowal were entirelybona fide, for they took place at a time and under circumstances such that no one could possibly have imagined that the correspondence evidencing them would ever see the light of day. Inasmuch as you mention these Anglo-Belgian pourparlers as among the reasons justifying Germany's invasion of Belgium, it is worth pointing out that this treaty defying invasion was perpetratedbeforeGermany had discovered the existence of the documents which evidenced that such pourparlers had taken place.
Germany's reasoning that she was compelled to take the initiative in violating the treaty of neutrality in order to avoid the imminent danger that England and France would do so first and thereupon advance troops against her through Belgium, is, even if such reasoning were morally admissible, no valid argument; for, only a few days before, England and France had solemnly pledged themselves in the face of the whole world to respect Belgium's neutrality.
If, as you believe, England had been planning for years to attack Germany via Belgium, would she not then have had in readiness an invading force somewhere near adequate for such an undertaking? Instead she had the mere bagatelle of 75,000 or 100,000 men, which in the first months of the war actually constituted her whole available continental fighting force.
To any one of unprejudiced judgment there remains, therefore, no choice but the conclusion that Germany's violation of Belgium did not even have the excuse of being a measure of self-defence, but, as the Chancellor in effect admitted in his first speech on the subject in the Reichstag, was undertaken simply because "in war the only thing that matters is those silly old victories."
Not, as you say, in obedience to England's command (what power had England either to command or enforce her commands?), but from a compelling impulse of national honour did Belgium oppose the German breach of neutrality withforce of arms, though it would evidently have been to her material interest to comply with Germany's summons or at any rate to offer merely nominal resistance.
Holland and Switzerland would have done the same thing under similar circumstances, as would any other self-respecting nation. Moreover, what weight could Belgium attach to Germany's promise of immunity in case she yielded, when at the very moment Germany, by her own act, was demonstrating but too clearly how little she considered herself bound by her promise or indeed by a solemn international treaty?