Mr. O'SHAUNESSY. I think that the question is how we are going to raise revenue, and I think he ought to first tell us what his idea is of raising revenue.

Mr. MOORE. If you gentlemen do not want me to go on I will quit. Mr. MARSH. I would like to have a chance to reach the proposition as to how to get revenue.

Mr. MOORE. In this article to which I refer, after the conference with Mr. Townley, which you say was participated in by William Kent, member of the United States Tariff Commission; William B. Colver, member of the Federal Trade Commission; Mr. Carl Vrooman, Assistant Secretary of Agriculture; United States Senator Robert L. Owen, president, National Popular Government League; Mr. Herbert Quick, member of the Federal Land Bank Board; Mr. Charles R. Crane, member of the President's commission to Russia; Mr. George P. Hampton, director the Farmers' National Headquarters; Mr. Judson King, executive secretary of the National Popular Government League; Mr. E. P. Costigan, member of the United States Tariff Commission; Congressman John M. Baer, of North Dakota; Judge Lawrence Becker, counsel in Treasury Department; and Mr. William Denman, formerly of the Shipping Board-you

say:

Mr. Townley admitted the indictment and prosecution of officers of the league, and made it clear that the indictments were in nearly every case not for disloyalty but for illegal assemblage. He created a distinctly favorable impression and certainly convinced a large part of the audience that the league is fundamentally loyal and devoted to the successful prosecution of the war, but equally devoted to terminating profiteering and privilege in this country.

Then you conclude by saying:

The program of the league and the methods by which it has been developed were discussed on these two occasions. Mr. Townley and his associates left no doubt as to the sincerity of their loyalty to the Government and to the principles for which we have entered the war, as enunciated by President Wilson.

I ask you to harmonize your own views and Mr. Townley's views, as indorsed by you, with the fact that Mr. Townley and a number of his associates are now under indictment for seditious utterances in Minnesota and in one or two other States.

Mr. MARSH. I will do that, and ask you whether you ask me that question because you are afraid to face the question of democratic financing of the war? You know perfectly well that an American citizen has a perfect right to be tried by a jury of his peers. I am not before a jury, but I will answer that question. However, I submit that when I am asked to appear on behalf of a revenue bill that the questions of Congressman Moore as tothe disloyalty of the Nonpartisan League are unworthy. Mr. Townley saw President Wilson last fall. Does that mean that President Wilson is seditious? I think there are in the Nonpartisan League, as there are in every organization, perhaps, a few men who are pro-German, and I think they ought to be punished to the limit of the law. I have been with the National Nonpartisan League, and I helped them last fall. I am going to be very frank with you about it.

Mr. MOORE. Where; in Minnesota ?

Mr. MARSH. In St. Paul.

Mr. MOORE. That is in Minnesota?

Mr. MARSH. Yes; I was at their headquarters there. And I have talked with a lot of those farmers, and I know that it is true of them, as it is of most of the farmers, as Secretary Houston said, that they are working from early in the morning until black darkness at night raising crops, and some of them are going broke. There may be a few disloyalists among the National Nonpartisan League, just as there are a few disloyalists among those of great wealth, who say, "We will strike if you take our money to win the war." You have no more business to indict the National Nonpartisan League on that ground than you have to indict the great body of men who get incomes of over $25,000, because a great many of them are loyal and are firmly loyal. I think, though, that Gov. Lindbergh was right when he made the statement-although I have never read his bookthat this was undoubtedly a profiteer's war, because I think there are some people who want to make money out of the war more than anything else.

Mr. MOORE. Mr. Kent is a member of the United States Tariff Commission?

Mr. MARSH. Yes, sir.

Mr. MOORE. He is a very wealthy man?

Mr. MARSH. I presume he is worth, perhaps, several millions.
Mr. MOORE. He was one of the speakers at the luncheon you had?
Mr. MARSH. Yes; and a strong supporter of Senator Lenroot.
Mr. MOORE. Your article says:

While Mr. Townley was in Washington the National Popular Government League, of which United States Senator Robert L. Owen is chairman and Mr. Judson King, secretary, arranged a meeting for the representatives of the National Nonpartisan League who had come to present the league's answer to the Senate Committee on Military Affairs-Mr. A. C. Townley, president, and Messrs. Arthur Le Sueur and John M. Thompson. Mr. William Kent, a member of the Tariff Commission, who spoke at the recent convention of the National Nonpartisan League in St. Paul, also tendered a luncheon to these representatives of the league.

Among the prominent people present at the meeting or luncheon were the gentlemen to whom I have already referred.

Mr. MARSH. I was not at the luncheon.

Mr. MOORE. Did you hear the speech of Mr. William Kent at the luncheon?

Mr. MARSH. No; I have just said that I was not at the luncheon. Mr. MOORE. Do you know whether he indorsed the views of Mr. A. C. Townley, Mr. Arthur Le Sueur, and Mr. John M. Thompson, who were being entertained when they came here to call on these public officials?

Mr. MARSH. Do I know whether he indorsed their views?

Mr. MOORE. Yes. He spoke at the luncheon, I understand. Mr. MARSH. Yes. As I say, I was not at the luncheon, but Mr. Kent spoke at their convention which, I think, was in March.

Mr. MOORE. Was Mr. Townley here when your new national headquarters were organized?

Mr. MARSH. I was not with the headquarters at that time, and I can not answer that question; I am almost positive, however, that he was not, because I think he was out in the northwest then.

Mr. MOORE. Did you hear Mr. Kent speak on this subject at all? Mr. Kent spoke in St. Paul, I understand, according to your report?

Mr. MARSH. Yes.

Mr. MOORE. You say here that—

Mr. William Kent, a member of the Tariff Commission, who spoke at the recent convention of the National Nonpartisan League in St. Paul, also tendered a luncheon to these representatives of the league.

Mr. Kent, of course, as you know, is a former Member of Congress, and he was a very prominent Member, and he is a man of considerable wealth. I wanted to know whether he indorses these general views of yourself and of Mr. Townley?

Mr. MARSH. Why not invite him here and ask him to tell you? Mr. MOORE. No; you are here—

Mr. MARSH (interposing). I think it is very strange that I am asked to speak here for all the prominent Democrats in America, and I suggest that you ask these gentlemen of conspicuous ability and large business experience to appear here before you and let them acquaint you with their views on this subject of war revenue. May I proceed now with my statement?

The CHAIRMAN. You had half an hour on Friday, and you have been for an hour now on your feet. Can you finish in five minutes? Mr. MARSH. I hope so.

The CHAIRMAN. Then, if you do not finish in five minutes, you can extend your remarks in the record.

Mr. MARSH. Gentlemen, I apologize if I seem to speak heatedly. It has not been so intended. I am perfectly willing for Mr. Moore to look into my record in Philadelphia, where I lived for seven He can do that to the fullest extent he desires.

years.

Mr. MOORE. You have expressed some peculiar views here.

Mr. MARSH. They are held by millions of workers throughout the country, and they are no longer peculiar.

Now, resuming where I left off, the fifth recommendation is:

Tax unearned incomes from secure investments more heavily than incomes earned by labor.

The sixth recommendation is:

Initiate a policy of greater reliance upon income taxes, rather than upon taxes on corporations, excess, and war profits.

We make those suggestions for this reason, that a corporation. may for a year or two make enormous excess profits and war profits, but they may be distributed among a lot of small stockholders, whereas a corporation may make a little money, but if the concern is owned by only two or three stockholders, they will make a big percentage of profits. In the one case there will be a wider distribution of the profits.

Now, we suggest that the equitable way to get at it, and the way to apply the principle of equality of financial sacrifice is not to rely so much upon excess-profits taxes and war-profits taxes but to adopt a policy of greater reliance upon income taxes. You should not rely so much upon excess and war profits taxes as a permanent measure, although you must do it this year, but you should rely upon a gradually progressive tax on these incomes. I think that the suggestion that we should have a consumption tax is a very tragic disparagement of the loyalty of the American people in this war. A consumption tax is like a thief in the night, and the man who urges a con

sumption tax practically implies that the American people do not want this war enough to be willing to pay for it in an open and above-board way. I think that they do want it enough to be willing to pay for it in that way. I do not believe that one-tenth of 1 per cent of the people of America are unwilling to see the thing right through. They know what the purposes of the war are, and they want to go through with it. A consumption tax is a sort of evasion. and we believe that it would be far better to place the chief reliance upon income and excess-profits taxes and upon taxes on the value of unused land or upon the value of inadequately used land. I do not believe in taxing a man's home, or anything of that sort, but a tax should be imposed upon unused land or inadequately used land. I would like to repeat, because there were only five members present when I made the statement, that the man who owns unused land is practically exempt from any Federal tax whatsoever.

Mr. HAWLEY. How much do you suppose you could get from a tax of that sort?

Mr. MARSH. I think that a tax of 1 or 2 per cent would yield anywhere from three to four hundred million dollars. I think that much could be derived from the taxation of unused and inadequately used land. That would apply, for instance, to lands in cities where the building does not represent at least twice as much as the value of the land. Usually in a city the value of the building is three times the value of the land, or, at least, one and a half times the value of the land. You may know, perhaps, that the value of the land in New York City is greater than the value of the agricultural farm lands in 20 agricultural States. That would give you some idea of who would pay the tax on inadequately used land. I shall only take enough of your time to summarize my statement in this way: This revenue bill will be watched by everybody in the world, and those who are doing the fighting and dying do not want to have to do the paying. From the way prices have been inflated, the $30 pay of the soldier, as it was a year ago, will be worth very much less this year. It will be worth only eighteen or twenty dollars, probably, as economists have told me. I have not any official figures on that, but I have talked with some very careful economists, and that is the statement they make. If you estimated it even as high as $25 it represents a big slump.

It seems unfair to the soldiers and to their families that the Government should adopt a system which would inflate prices to such an extent that their earnings would be reduced that much in real value. I reiterate my statement that I believe that these enormous fortunes are a great menace to any democracy, and we believe that it would be of great encouragement to Russia to come back into the war if America should say, "Although it is the first time that it has ever happened, we are going to put property and human beings on exactly the same basis in this war." The Government has not only the legal but the moral right to conscript men in war times, and it is not only the moral right of the Government but its solemn duty to put wealth on all fours with men in the war. I believe that it will also scare this Kaiser a little bit. He would say, "Those folks are dead back of this war, because their rich people are coming across." I think that Congressman Longworth said in a speech

that Germany was paying only about 11 per cent of the cost of the war in taxation.

Mr. LONGWORTH. I have not the exact figures.

Mr. MARSH. Of course, none of us have the exact figures. Now, why do they do that? It is because the Germans are hoping to be able to collect large indemnities at the end of the war, but, of course, they are not going to do it. We are not in the war on that basis. If we should go into the war on the basis that I have suggested, we could not pay a greater tribute to the worth of the American, English, French, Belgian, and Italian Armies. Now, of course, we all understand that this revenue bill will have a big bearing on the conduct of the war as well as on the revenue.

I thank you very much for your courtesy, and I would be glad to come back and call on Congressman Moore and talk over this matter with him at any time he wants me to.

Mr. LONGWORTH. I want to ask you one or two questions. You say that the reason that Germany has collected only about 11 per cent of her war costs by taxation is because they hope to collect indemnities.

Mr. MARSH. That is the only reason I can see.

Mr. LONGWORTH. Of course, you know that Italy and France are financing their war expenses at about the same ratio. You would not say that there was any ulterior motive there, would you?

Mr. MARSH. No, sir; I think that they are taking just as large a percentage, or nearly as large a percentage, as we are.

Mr. LONGWORTH. In France they are raising about 15 per cent by taxation, but in Italy only 11 or 12 per cent.

Mr. MARSH. I do not know exactly what their reason is, but I ain sure that with all of our wealth we have no reason to do it.

Mr. LONGWORTH. Do you know any instance in history where a nation has financed a war by over 25 per cent in taxation?

Mr. MARSH. I think we financed about 40 per cent of the Civil War by taxation. I may be mistaken, but I think so. I have seen that statement, but I do not know whether we did or not. But, at the same time, there was never any war like this, and there was never any country in the world that had the accumulation of wealth that we have. I do not know of any country that has had to fight with poison gas, or airplanes, or submarines, etc., before. As new methods arise, we must meet the situation that confronts us, not according to precedents, but in the fairest and most just way. That, I know, is what we all want to do. I want to say this, that I think your suggestion in which you urged a rate of unearned incomes higher than upon earned incomes is an admirable one, and you deserve great commendation for the fight that you have made.

Mr. LONGWORTH. I am only asking you what is your theory for the financing of this war, and it seems that you think that we should finance it on a basis entirely different from that on which we have heretofore financed any war, or upon which any nation in history. has ever financed a war.

Mr. MARSH. I think we should because of the enormous accumulation of wealth here. I would also suggest that no nation has ever gone into a war before when that nation has had the opportunity to make so much money out of a war that had been raging for some