NOVEMBER 24, 1950
HYDE PARK, Thursday—It is interesting to read of various witnesses that have appeared before the House Ways and Means Committee during the hearings on the excess-profits tax. To me this tax seems a perfectly reasonable one.
If business is permitted to receive legitimate returns on investments and a levy is made only on more than ordinary returns, one would think that it was fair and did not in any way affect the smooth running of the nation's economy. But apparently most businessmen do not look upon it in this way. They fear that an excess-profits tax will mean that no effort will be made by business to expand and to make more money by producing more. Therefore, they think there will be fewer goods on the market, and prices for those goods will go up.
I don't suppose there is any way of making people, for patriotic reasons, continue to invest their money at a lower rate of interest. There is no way of forcing businessmen to expand their businesses and work as hard as they can even though their profits will be smaller than they would ordinarily be. I will grant you that an excess-profits tax which is not accompanied by price control, perhaps even rationing of important commodities, and wage controls, will probably not cover the area that needs to be covered in the present defense effort. By itself, an excess-profits tax is not enough.
I can quite see the point, too, of the businessmen. They say that if we are going to have rationing and price control, these regulations must be enforced and black markets and gray markets must be entirely wiped out. Otherwise, it is entirely unfair.
When they add that a business is entitled to have someone in charge of regulations that knows that particular business, this desire also seems to me to be a highly sensible one. A man who knows the rubber business should not be in charge of regulating farm prices, and a steel man should not be in charge of regulating groceries.
I think, however, that if a man who merits his appointment can choose his aides and do an all-over job, perhaps we can go a long way toward meeting some of the needs that are going to arise later this year or next.
We cannot live as though our lives were normal when extra demands are being made on our economy. Simultaneously we must find the wherewithal to make ourselves strong in a military way and help our allies and the free peoples of the world to increase their own strength and well-being. This is a vast undertaking.
Just as the businessmen at the hearings all try to play down the need for any regulation in our economy, so the labor groups insist that we will need more controls and that they must stem from the excess profits of business. Neither group really wants to pay the piper. But both groups, when they cease to be employers and employees, find themselves as consumers, paying the price for the ultimate plan decided upon.