Mr. Mook. Would you take it from him?

Mr. MARSH. If you want to make it $100,000 I will compromise on that, as far as we are concerned.

Mr. MOORE. Then above $100,000 you would take everything away from him?

Mr. MARSH. I do not know why you should not. When you ask a soldier to go and fight you do not say, "Will you give 50 per cent of your life to the Government?"

Mr. MOORE. That is all right and that is a very clear answer. But you know that a soldier must be maintained. We have got to supply him with equipment; we have got to supply him with munitions of war; we have got to build ships to take him over and get supplies to him, and do many things to take care of the soldier; but if you take away the money that a man earns through an enterprise which is devoted to the support of the war I am wondering where you are going to. land.

Mr. MARSH. But I am not talking of a capital tax; I have not mentioned a capital tax, and your criticism would lie only against a capital tax, which, by the way, has been discussed, as you know, in England, and which, I think, it would be very foolish to attempt at this time. I think it would mean the breaking up of business.

Mr. GARNER. If this war continues two or three years-and some other able men, who know more about it than you or I, have said that it will probably continue that long-you have got to collect taxes in the next fiscal year.

Mr. MARSH. Yes, sir.

Mr. GARNER. And in the next fiscal year. If you destroy the incentive of a man to have an income because the Government is going to take everything away from him above a certain figure, how are you going to collect taxes at all? In other words, you are killing the goose that lays the golden egg.

Mr. MARSH. Your question postulates a lack of patriotism on the part of the rich which I would not expect anybody but an I. W. W. to accuse them of.

Mr. GARNER. I have never seen a man who was so patriotic, as you intimate, as to be willing to give the Government all of his money above a certain amount.

Mr. MARSH. Why in thunder should he not do it? Lincoln said, you know, when a bunch of rich men

Mr. GARNER (interposing). The fact that he does not do it answers your question.

Mr. MARSH. All right, then, but I think it is on the same basis as the supervision which the Government is now making of almost every individual and industry in the country. It seems to me it is perfectly obvious that the Government could take everything above a certain amount, as well as it can supervise these various industries. May I continue to make some other suggestions?

Mr. HAWLEY. Suppose a man having an industry should earn, after paying all of his obligations, $1,000,000. He has planned to extend his industry so as to produce more of the things needed for the war and intends, by the expenditure of $600,000 of that million dollars, to enlarge the industry. Would your proposition to take all in excess of $100,000 prevent him from putting that $600,000 into

an enlargement of the industry, or is it your proposition to take all of the $900,000 and put it into the Treasury of the United States? Mr. MARSH. It would prevent him from putting that money which he had secured-it would not prevent the money being put into that industry. I tried to make that clear.

Mr. HAWLEY. How would you accomplish that?

Mr. MARSH. The Government is to-day assuming, and necessarily so, absolute control over all industrial activities, financial transactions, and everything else in the United States-railroads, express companies, and everything else, and it can not do that logically as long as the Government has got to go out and compete with private capital which may be going into nonessential industries. I think that such a measure

Mr. HAWLEY (interposing). My question was based on an essential industry. All enlargements are made by borrowing the surplus earnings of somebody else or using one's own surplus earnings. If he can not put $600,000 of his own earnings into an expansion of his business he must borrow it from somebody else, which would represent the surplus earnings of somebody else. If all of the surplus earnings must be put into the Treasury where would you get the capital with which to enlarge a business?

Mr. MARSH. Get it from the Treasury, into which it goes, because that is where it will go.

Mr. HAWLEY. That would mean the nationalization of all industries?

Mr. MARSH. If we do not nationalize industry we are going to lose the war.

The CHAIRMAN. We must go to the House in probably three min

utes.

Mr. MARSH. May I come back again, because I had only gotten started.

The CHAIRMAN. How long will it take you to finish now?

Mr. MARSH. It will take me about a half or three-quarters of an hour.

The CHAIRMAN. You are in the city?

Mr. MARSH. Yes, sir.

The CHAIRMAN. Would it be perfectly satisfactory for you to come here at some other time?

Mr. MARSH. Absolutely.

The CHAIRMAN. And continue your remarks?

Mr. MARSH. Yes, sir. I have only suggested one of my topics and I have not had time to develop it, so that I would like to continue it.

(Thereupon the committce recessed until 2.30 o'clock p. m.)

[THIS PRINT OF THE HEARINGS IS SUBJECT TO REVISION
BEFORE THE FINAL PRINT]

JUNE 8, 1918

WASHINGTON

GOVERNMENT PRINTING OFFICE

COMMITTEE ON WAYS AND MEANS,
HOUSE OF REPRESENTATIVES,
Saturday, June 8, 1918.

The committee this day met, Hon. Claude Kitchin (chairman) presiding.

There were also present Representatives Rainey, Dixon, Hull, Garner, Collier, Dickinson, Oldfield, Crisp, Helvering, O'Shaughnessy, White, Moore, Green, Longworth, Sterling, Martin, Hawley, and Treadway.

The CHAIRMAN. Mr. Johnson, you want to be heard this morning, and we will be glad to hear you.

STATEMENT OF HON. ALBERT JOHNSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON.

Mr. JOHNSON. I am glad of the opportunity to come before this committee to open briefly the troublesome subject of the second-class postage rates. I would like to say that I have been consulted by no one affected by the zone system. I introduced a bill last may in an effort to advance what I thought was an equitable method of arranging the second-class zone system.

Mr. GARNER. Have you a copy of that bill?

Mr. JOHNSON. Yes; I have a new bill, which is now numbered H. R. 12374.

Mr. GARNER. Will you put it in the record?

Mr. JOHNSON. Yes, sir.

(Said bill follows:)

[H. R. 12374, Sixty-fifth Congress, second session.]

A BILL To provide for the revenue of the Government by establishing a graduated rate for payment of a tax on newspapers and periodicals according to rate of subscription price and number of copies circulated through the mails, in addition to existing rates.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That on and after January first, nineteen hundred and nineteen, the rates of postage on all mail matter of the second class shall be, in addition to the existing rate of 1 cent for each pound or fraction thereof, as follows:

For newspapers, magazines, and other periodicals whose subscription price is 50 cents or less per year, and whose circulation through the mails is less than twenty thousand copies per issue, one-half of 1 cent for each annual subscription circulated through the mails.

For newspapers, magazines, and other periodicals whose subscription price is 50 cents or less per year, and whose circulation through the mails is more than twenty thousand copies but less than one hundred thousand copies per issue, 1 cent for each annual subscription circulated through the mails.

For newspapers, magazines, and other periodicals whose subscription price is 50 cents or less per year, and whose circulation through the mails is more than