NOTES OF THE DAY

Dominion, Volume 30, Issue 173, 19 April 1937, Page 8

NOTES OF THE DAY

It is reported by the Secretary of the United States Treasury that as the result of tax receipts being nearly 500,000,000 dollars below the estimate, the Government has been forced to resume borrowing—at the rate of 50,000,000 dollars a week—and that heads of Government departments have been ordered by the President J:o cut expenditure to the limit. American systems of taxation —Federal and State —differ so greatly from other countries that comparisons are difficult to state. . Until the Roosevelt regime the American citizen stood third in the list of per-capita taxation compared with the British (first) and the, French (second). To-day, according to calculations worked out by Mr. E. C. McDowell, jun., and published in Current History, he seems likely to head the list. There is a point in taxation where the law of diminishing returns begins to operate; with every increase in taxation beyond that point, the fall is accelerated, because the strain on income-producing capacity through the demands of taxation results in a steady drop in income and a. consequent restriction of effort to expand it. There is a moral in this for New Zealand to digest.

A cable message to-day gives some indication of the losses incurred by Great Britain as the result of the suspension, of her trade connection with Italy through the operation of the sanctions embargo over the Abyssinian affair. It will be remembered that many of the League States evinced some concern at the time as to the possibility of trade losses, and several raised the question of compensation. It will thus be seen that even without recourse to arms as an extreme measure of compulsion the application of the League sanctions over an extended period would have resulted in heavy trade losses, and consequent political pressure, with attendant complications, on their respective Governments by those whose business was affected In countries remote from Europe, yet fied by League obligations to support the sanctions, prolongation of the embargo would no doubt have resulted in irritations that would have inevitably caused dissensions. In the end high principles would have been subordinated to selfinterest. In future attempts to uphold the rule of law among nations it would seem that armed force, and subsequent payment by the offender of costs, would be the only effective measure. Experience has shown that the nations are not yet ripe for such salutary principles of action.