Paternalistic control, even when entirely benevolent in intent, is generally harmful in effect. It is apt to be doubly so when, as sometimes occurs, it is punitive in intent. The history of our railroads in the last ten years is a case in point. In their early youth our railroads were allowed to grow up like spoiled, wilful, untamed children. They were given pretty nearly everything they asked for, and what they were not given freely they were apt to get somehow, anyhow. They fought amongst them

To drop the style of story-telling: Individual enterprise has given us what is admittedly the most efficient railroad system in the world. It has done so whilst making our average capitalization per mile of road less, the scale of wages higher, the average rates lower, the service and conveniences offered to the shipper and the traveler greater than in any other of the principal countries. It must be admitted that in the pioneer period of railroad development, and for some years thereafter, nume

You all know the result. The spirit of enterprise in railroading was killed. Subjected to an obsolete and incongruous national policy, hampered, confined, harassed by multifarious, minute, narrow, and sometimes flatly contradictory regulations and restrictions, State and Federal, starved as to rates in the face of steadily mounting costs of labor and materials—that great industry began to fall away. Initiative on the part of those in charge became chilled, the free flow of investment capital was

For a concise statement of the results accomplished elsewhere under government ownership I would recommend you to obtain from the Public Printer, and to read, a short pamphlet entitled "Historical Sketch of Government Ownership of Railroads in Foreign Countries," presented to the Joint Committee of Congress on Interstate Commerce by the great English authority, Mr. W. M. Acworth. It will well repay you the half hour spent in its perusal. You will learn from it that, prior to the war, about fifty

And, it seems to me, one of the duties of business men is to inform themselves accurately and carefully on this subject, so as to be ready to take their due and legitimate part in shaping public opinion, and indeed to start on that task now, before public opinion, one-sidedly informed and fed of set purpose with adroitly colored statements of half truths, crystallizes into definite judgment. My concern is not for the stock and bond holders. They will, I have no doubt, be properly and fairly take

I have spoken of the treatment of our railroads in the past ten years as "punitive paternalism." In some respects this same term may be applied to our existing and proposed war taxation. Of course, the burden of meeting the cost of the war must be laid according to capacity to bear it. It would be crass selfishness to wish it laid otherwise and fatuous folly to endeavor to have it laid otherwise. We all agree that the principal single sources of war revenue must necessarily be business and accum

The characteristic difference between the House Bill and the revenue measures of Great Britain (I am not referring to those of France and Germany, because they are incomparably less drastic than ours or Great Britain's) is, first, that we do not resort to consumption taxes and only to a limited degree to general stamp taxes, and, secondly, that our income tax on small and moderate incomes is far smaller, on large incomes somewhat smaller and on the largest incomes a great deal heavier. The House

The same observations hold good in the case of our proposed inheritance taxation (maximum proposed here forty per cent., as against twenty per cent. maximum in England and much less in all other countries). And again there are to be added to Federal taxation the rates of state legacy and inheritance taxation. Inheritance taxation, moreover, has that inevitable element of unfairness that it leaves entirely untouched the wastrel who never laid by a cent in his life, and penalizes him who practiced

Whilst the House Bill imposes luxury and semi-luxury taxes, it fails—as I have mentioned before—to resort to consumption taxes of a general kind—a deliberate but, in my opinion, unwarrantable omission. My advocacy of consumption and similar taxes, such as stamp taxes of many kinds, is not actuated by any desire to relieve those with large incomes from the maximum of contribution which may wisely and fairly be imposed on them. I advocate consumption and general stamp taxes—such as every other bel

Turning aside from this interrogation mark, I will only add, in returning to our general scheme of taxation, that there are numerous taxes of a tried and tested and socially just kind—some of them applied in this country during the Civil War and the Spanish War—which would raise a very large amount of revenue and yet would be little felt by the individual. Some of them have been suggested to our legislators, but have not found favor in their eyes. Their non-imposition, taken together with the en