Campaign speech on behalf of Herbert Hoover by Treasury Secretary Andrew Mellon
October 11, 1928
Full speech available here.
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That the Administration has made good its promise is best attested by the fact that today the finances both of the Government and of the country are in a sound condition. Under the present Administration taxes have been materially lowered on four occasions. Expenditures have been cut. The public debt has been reduced so that it is no longer a heavy burden on the taxpayers. The nation has been given the benefit of a protective tariff; and during the entire period the country has moved steadily forward, getting further and further away from the unsettled conditions which prevailed in 1921, when the present Republican Administration took office.
At that time the whole economic structure seemed in need of readjustment. Now, after nearly eight years, it is possible to judge of what has been accomplished. Not only has the nation passed through this difficult period of post-war readjustment, but during the last three or four years it has enjoyed one of the most prosperous periods in its history.
In no other nation and at no other time in the history of the world have so many people enjoyed such a high degree of prosperity or maintained a standard of living comparable to that which prevails throughout this country today. There are, of course, some localities and some industries, just as there are always some individuals, who from time to time do not share equally in the prevailing prosperity. The task of government should be to lessen that inequality wherever possible; and this the present Administration has tried to do. The test, however, of whether a nation is prosperous or not depends upon whether it can be shown that the average man and woman, or the majority of them, share in that prosperity and are able not merely to maintain but to raise their standard of living.
In the United States today conditions as a whole meet that test. Our highways are crowded with automobiles, and statistics show that the number of passenger car registrations have more than doubled in the last seven years. Savings deposits have nearly doubled; and bank deposits have increased from 39 billion dollars in 1921 to 56 billion in 1927. Our foreign trade now amounts to nearly 9 billions a year, and each year since 1924 we have invested a billion dollars in foreign securities.
In 1921, 6 ½ million individuals reported for Federal tax purposes a total income of 19 ½ billion dollars. In 1927, 4 million individuals reported an income of 22 ½ billion dollars. During this period, as a result of the Administration’s tax reduction program, more than 2 ½ million individuals were relieved entirely of all liability for Federal income taxes; and yet, due to increased prosperity, the income reported by the decreased number of taxpayers was 3 billion dollars more than was reported in 1921. Furthermore, the Preliminary Statistics of Income for the year 1927, which are now being compiled by the Treasury, show that in the year 1927 there was a substantial movement of taxpayers from the lower grades into the higher ones, a thing which could not have occurred if there had not been an increasing volume of earning during the year, as well as a fairly uniform and widespread prosperity.
The Administration’s tax policy has been a material factor in this situation. Within a period of seven years there have been four sweeping reductions of taxes. In 1921, 1924, 1926, and 1928 Congress passed revenue bills at the strong urging of the Administration reducing taxes about 1800 million dollars a year or about 5 million dollars a day as compared with what would have been collected under the 1918 law. Back in 1921, although the war had been over nearly three years, taxes were levied on many commodities such as railroad and Pullman tickets, victrolas, pianos, automobiles, candy, chewing-gum, soft drinks, ice cream, and many other things besides. Today none of these things are taxed. When the present Administration took office in 1921, a married man with a salary of $250 a month was paying an income tax of $40; today he pays nothing. A man earning $4000 a year was paying $80; today he pays $5.63, and so on up to $10,000, on which the tax in 1921 was $590, whereas today it is less than one-fifth of that amount.
These are examples of the very real benefits which the taxpayers enjoy by reason of the Administration’s tax policy. But this is not all that the Administration has been able to accomplish. It has also made use of the opportunity offered by tax reduction to effect that reform of the tax system which has been one of the objectives of the present Administration. When the Administration came in, it found an elaborate war-time system with numerous and heavy taxes on many commodities and activities. Enterprise and initiative were discouraged. Today there is an internal revenue system of few and relatively light taxes. Moderate rates have been substituted for excessive ones and, true to sound tax principles, have proved more productive in revenue than were the higher rates. By raising exemptions and credits, the small taxpayer has been almost entirely relieved of the burden of Federal taxes. Productive business, by being freed of oppressive rates, has been taken out of a straightjacket and permitted to expand in an orderly manner, unhampered by artificial restrictions of the tax laws. Capital is no longer driven into such channels as tax-exempt securities in order to avoid payment of the tax. As a consequence business has expanded; the national income has increased; and adequate revenues for the Government have been realized, even with lower rates and fewer taxpayers.
Not only have taxes been lowered but great reductions have been made in expenditures. One of the first acts of the new Administration was the establishment of the Budget System, under which the Government’s spending departments have been organized and the budget has been reduced by nearly 1900 million dollars as compared with the last fiscal year of the preceding Democratic Administration.
At the same time the public debt has been reduced over six billion dollars. That debt is represented principally by war loans, which the Government borrowed from the people of the country in order to carry on the war. These loans must be repaid; and it is the part of wisdom to pay them off as quickly as possible, for the interest charges constitute a heavy burden on the taxpayers. During the last eight years the average interest rate on the entire debt has been materially lowered and over eleven billion dollars of securities have been paid off or exchanged for securities bearing lower rates of interest. All of this has resulted in a saving in interest payments of not less than 268 million dollars a year.
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