In judging the new tax bill, it is important to differentiate sharply between the general principle of taxation which lies behind it, and the particular form and manner in which it is drawn up. The first remains excellent; the second appears to justify the statement of the New York Times that it is one of the worst tax bills in the history of the House.

Economically the taxation of undistributed corporation profits appears to be sound, from the point of view of mitigating the severity of booms, and consequent depressions. The Times editorial's fear that the tax would stunt the growth of American industry and restrict the opportunities for new employment seems silly in view of the fact that the receivers of dividends would still have the opportunity to reinvest these profits through the ordinary channels of the investment market, the only difference being that this market, and not the views of the management of the corporations, should decide in what industries to invest. Considering that the over-expansion of the automobile industry was one of the main causes of the depression, the statistics given by the Times as to the reinvestment of profits in that industry during the boom would appear to be a strong argument in favor, rather than against, the principle behind the new tax bill. Had it been in effect, the excessive boom in this industry would have been prevented, a better balance dictated by the investment market would have obtained between the different industries, and the depression caused by this maladjustment prevented.

The principle of taxation deliberately applied in order to help, rather than hinder, the natural workings of the capitalistic system; to lessen, rather than increase, the growing rigidities, would appear to be essential if that system is to survive. As compared with Soak-the-Investor taxation, and the rigidities of monopoly, price fixing, wage fixing, and output fixing of the N.R.A., the Wagner Bill, and the A.A.A., this new principle looks like something straight from the angels. It is extremely sad that Roosevelt should again have betrayed what promised to be a great idea by the stupidity with which he worked it out in practice.