An International Survey
The Empire Club of Canada Addresses (Toronto, Canada), 17 Apr 1924, p. 184-209
Kahn, Otto H., Speaker
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The speaker's observations and impressions after a return from a recent trip to Europe, during which time he had the opportunity of speaking with most of the leading statesmen in the countries visited, and with many important men in financial and industrial life. His international survey begins with England. The fact and causes of the stubborn continuance of unemployment on a vast scale. A distinct and noteworthy improvement showing in the latest reports. England's dependency on world trade, on the prosperity and the purchasing power of the rest of the world. Causes of her loss of markets. England's debts and burden of taxes. The fine example England is setting in paying her war debts to the United States. The ways in which England is facing and dealing with her difficulties. The speaker's confidence in England overcoming her difficulties. France, and her prevailing prosperity. The lack of misgivings as to the future of France. The Dawes Report. Italy and the almost unbelievable change which has come over the country in the last 18 months. Giving credit for the changes to Benito Mussolini. An examination of Mussolini and his work. Economic and social conditions in Italy. A discussion of affairs in the United States. The general business situation in the U.S. No intrinsic reason why the era of prosperity which started in 1922 should approach its end if affairs are dealt with with reasonable care, foresight and wisdom. One discernible element which bears within it the seeds of disturbance to prosperity: politics. Three acute questions that have arisen which lend themselves peculiarly to the exemplification of those shortcomings and troublous potentialities which are inherent to a greater or lesser degree in any system of popular government. An examination and discussion of each of the three problems (agriculture, taxation, Washington investigations and disclosures) follows. Then, a discussion of Canada, with some suggestions for Canada's great future. Lastly, some remarks on "the English-speaking family" of countries and the League of Nations.
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17 Apr 1924
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AN INTERNATIONAL SURVEY AN ADDRESS BY MR. OTTO H. KAHN. Before the Empire Club of Canada, Toronto, April 17, 1924. MR. OTTO KAHN.

Mr. Kahn was introduced by President Brooks and was received with loud applause, the audience rising and cheering. He immediately put himself en rapport with the audience by telling an election experience in England fifteen years ago when, at the suggestion of his friends, Lord Beaverbrook and Mr. Bonar Law, he tried the experiment of presenting himself before a constituency in Lancashire, with the view to the possibility of his running as a Conservative candidate.

In an interview with the Chairman of the local Conservative Association, the latter examined him as to his views, tendencies, the policies he would advocate, etc. At the close of the interview the Chairman, a crusty old fellow, said, "Well, you seem all right; your opinions are about what our people want; but"--with a little hesitancy--"but, excuse me for saying it, you don't quite speak like an Englishman. You have something of an accent. I suppose you are a Colonial." (Great laughter) He added, reassuringly, "That will be quite all right; we like


Mr. Otto Kahn is a partner in the famous banking firm of Kuhn, Loeb & Co., New York, and is recognized as one of the great financiers of today. He is internationally famous as the foremost patron of the! Arts in the United States, especially in the departments of music and drama. He is president of the Metropolitan Opera of New York. A talented musician, a collector of paintings and art works, a lover of literature and a keen student of history and politics, Mr. Kahn also ranks high as a writer and speaker on economics.


Colonials." (Laughter) Mr. Kahn replied, "I am sorry to disappoint you; I am not a Colonial;" to which the Chairman responded, "Oh well, I recall your mentioning that you have lived a long time in the States. I suppose, then, that it is a Yankee accent." Mr. Kahn said, "No, it is not a Yankee accent, either; I was born the son of a naturalized American father, but who was a native of Germany, where I was born and brought up." The old man's face fell, for even fifteen years ago it was not exactly a recommendation to a British constituency to have been born in Germany. He pondered a little and finally asked, "Do you have to say that?" Mr. Kahn replied, "Why, of course, I am not ashamed of my birth. I am not going to stand at the street corners and shout out biographical data about myself but if anyone asks me, of course I will say what I have just stated to you." The Chairman stood a minute, pondering; then said with sudden emphasis "Well, no one will ask you!" (laughter)--and he went away chuckling to himself. In the afternoon the new candidate, accompanied by the Chairman, went about kissing babies, inquiring solicitously after the health of the mothers and the business of the fathers, and in a general way tried to make himself pleasant. No one seemed the least curious as to where he came from. In the evening he made a speech before his prospective electors, manifestly with that somewhat un-English accent. He met a number of people afterwards and still there was that same complete absence of inquisitiveness. He was puzzled by that strange reticence. The riddle was solved the next morning and the Chairman's fine hand disclosed, when, in reading a report of the meeting in the local paper Mr. Kahn came across this sentence: "Among the attractive features of our prospective candidate, Mr. Kahn, is his quaint French-Canadian accent." (Great laughter)

The speaker then proceeded: Now, then, gentlemen, whatever accent you may find in my method of speaking, I trust you will discover one accent which lies deeper, and that is the accent of sincere admiration and sincere good-will and sincere interest for Canada. (Applause) In saying this I am merely echoing the sentiments prevailing among 110,000,000 Americans south of you, even though our tariff policies may not always convince you of that. (Laughter)

When, before coming here, I asked my exceedingly well-informed friend and companion, Sir William Wiseman, who, though an Englishman, is almost a Canadian and almost an American and thoroughly at home among all nations that speak the British tongue, what I had better talk about, he replied, "I know Toronto well. You will have a very wideawake audience, an intelligent lot of people with a broad outlook, interested in anything which is worthy of interest. Why don't you tell them something about the world at large?" So, having returned but a few months ago from a trip to Europe, in the course of which I had the opportunity of speaking with most of the leading statesmen in the countries I visited and with many important men in financial and industrial life, I concluded to weave my observations today around the text "An International Survey."


Among the many and trying problems which confront England (I am using the word "England" for the sake of brevity, instead of the term "Great Britain"), the most serious and immediate one is the fact--and the causes--of the stubborn continuance of unemployment on a vast scale, though I am glad to say that the latest reports show a distinct and noteworthy improvement in this respect.

A small, unfertile island, being but scantily endowed with natural resources, except iron and coal, she is absolutely dependent for her position as a great power, indeed for the very nourishment of her population, upon her world trade.

Her own prosperity is largely dependent upon the prosperity and the purchasing power of the rest of the world. At present, not only is the consuming capacity of several hundred millions of people in Central and Eastern Europe greatly reduced (with resulting repercussions on other European states and, indeed, more or less throughout the world) but the normal flow of trade has been made more difficult through the shortsighted and disruptive economic dispensations of the peace treaties of 1919.

Each new frontier created under these instruments--and all were created from the sheer political point of view, with incomprehension, or disregard, of economic consequences--has turned out to be a barrier thrown across the course of trade. Custom houses, frontier red-tape and vexations, arbitrary ordinations concerning exports and imports, have been multiplied in the newly set-up States, each of which is pursuing a policy of narrow economic nationalism. Grass is growing on some of the broad highways along which the commerce of the world has been wont to move for generations.

Moreover, fluctuating and depreciated currencies, the reduced standards of living for labour in Continental countries, and other causes have intensified the difficulty for England to export her manufactures and, at least in certain lines, even to hold her own in the home market against the foreigner.

Furthermore, being the only country among the Allied nations that is paying her debts abroad, and resolutely adhering--as she does--to the sound doctrine of meeting her budgetary requirements by taxation, her people, her commerce and her industry are supporting a burden of taxes heavier than exists anywhere else.

She has done things nothing short of heroic in maintaining, in spite of immense difficulties, those fine old traditions of commercial honour and economic righteousness, which are among the principal pillars of the edifice of her greatness. If anything, in her splendid determination not to fall short of these traditions, she may even have gone a little beyond the point of what was strictly necessary.

In the manner and the matter of her settlement of the war-debt due from her to the United States, she has set one of the finest examples ever given by a nation of abiding by the highest standards of financial integrity.

Grave as is the burden to which she has put her shoulder, without complaining and without boasting, I have no doubt that in the long run it will prove a good investment, for uncompromising honesty, steadfast adherence to tested economic principle, sturdy maintenance of those imponderables which spell prestige, do mean national dividends in the end. England will reap the fruits of her admirable course of action; have no fear as to that!

She is facing her problems with calm and with great courage. She has taken stock of the realities and has braced herself to meet them. She has resolutely discarded reliance upon illusory expectations. She is thinking hard. Her best brains are addressing themselves to finding the right solution for her problems and devising ways and means to meet the novel situation which a changed world has created for her.

The route which England selects habitually is not the easiest road. For generations she has been used to meeting difficulties and obstacles and has steeled her character and trained her wits to overcome them. She has learned in the hard school of experience the momentous lesson, all too often unheeded by nations or individuals, to use great power wisely and fairly, with restraint and circumspection. And all history shows that power permanently will only stay in such hands as do not abuse it.

It is not the bounty of nature or the possession of advantageous frontiers which make a nation great. It is the qualities and the efforts of its people. During the war and since the war, the people, of British stock have demonstrated that they possess in undiminished degree those qualities and are prepared to make those efforts, which explain and warrant the position of greatness which they have so long maintained.

I have no fear that the present Government of England will jeopardize that position. To the doctrines of Socialism, professed by the party from which that Government is mainly recruited, I am unalterably opposed--not because they are novel and subversive of existing social conceptions, but because I believe them to be fallacious in theory, and in practice a denial of some of the most fruitful impulses and some of the most valuable attainments of humankind. But I know personally and esteem greatly a number of the leading men in the Labour Government. I consider them to be not only men of unusual ability but men loyally attached to their country, meaning to serve its welfare according to their lights, conscious of their responsibility, and amenable to the lessons of practical experience in the affairs of government. Also, it should be borne in mind that the Labour Government holds office in a restricted or tentative way. Theirs is not a blank cheque, but one which must have the countersignature of either the Conservatives or the Liberals in Parliament before it becomes valid.

Moreover, the traditions of England are so deep-rooted and compelling, the road which she will only leave at great peril to the nation is so plainly marked, that even if I did not have the conception which I do have of the leaders of the existing Government, I would still have full confidence that the sound sense of the people, their innate stability, their genius for government, trained by the experience of centuries, and their characteristic capacity to recognize, and deal with, the realities of things, would cause predominating public opinion of England to interpose effective barriers to any course of action which would drive the ship of England into the hazards of uncharted seas.

For many years, now, it has been the fashion to propound that England is on the decline, that poor old John Bull is going to the dogs. For thirty years past, whenever I crossed the ocean, I have had pointed out to me how England was fading and sinking. Even among Englishmen, having, as many of them have, a predilection towards self-depreciation, quite a number were to be found who joined more or less in that gloomy chorus. Either it was those dreadfully efficient Germans who were ruining England's trade, or it was the Japs, or the Yankees, but somebody was always ruining England. And all that time she was to be found at the old stand doing business in her old, wise, honourable way. In despite of dire predictions in pre-war days, throughout the dreadful strain of an appalling war, beset with trials, tribulations and problems since its close, she has stood four-square to all the winds that blow. And so she stands today, not free from cares and troubles, it is true, a little weary, but resolutely bending to the task, game to the core, warranting unabated faith in the maintenance of her might and greatness.

That she should succeed, speedily and completely, in solving her problems, overcoming the obstacles in her way-as I have not the slightest doubt she willand emerging into the sunlight of full prosperity and potency, I hold to be greatly for the best interest, moral and material, of all the world.


Prosperity prevails in France. There is no unemployment, there are few strikes. Her people, proverbially laborious and thrifty, and intensely patriotic, have applied themselves with admirable zeal and determination to the work of repairing the ravages of war, materially and in other ways. Her economic position is excellent, her visible trade-balance resulting in but a relatively small excess of imports over exports, while the invisible trade balance is greatly in her favour, for, she is the garden and the recreation ground of the world, actually and spiritually, of perennial and compelling charm, a treasure house of beauty and interest, and hundreds of thousands of the peoples of all lands are drawn within her borders each year, and that influx means a corresponding stream of gold.

She has erred in certain deviations from correct budgetary principles, with results unfavourable to the fiscal position of the Government and derogatory to its credit. But this course has been definitely arrested and corrected through legislation which was put through last month under Mr. Poincare's energetic leadership. As a consequence of the measures thus enacted, the franc has fully recovered the value that it commanded prior to the collapse which it underwent a few weeks ago, intensified as it was by utterly reckless speculation and by deliberate assault.

No one who knows the qualities and traditions of the French people and who has a conception of the solid, widely diffused wealth and of the natural advantages and resources of that beautiful and aboundingly favoured country--not to mention the immense value of its North African and other Colonial possessions--can be tempted into any misgivings as to the future of that great and brilliant nation.

I had the privilege a few months ago of an extended private conversation with Mr. Poincare. He is a man of remarkable brain power, of great firmness, determination and energy, an indefatigable worker, utterly unsparing of himself, ardently patriotic and manifestly sincere. His mentality being essentially that of a great lawyer, and being dominated by acute and relentless logic, he has, as the French say, "les defauts de ses qualites"--as is the case, I suppose, with us all.

No useful purpose would be served in discussing, at this time, the matter of the occupation of the Ruhr and the divergencies, between French and British policy in respect of the problem of reparation and related questions--divergencies which, it is a satisfaction to observe, appear in process more and more of being reconciled or eliminated.

The most encouraging and reassuring thing, which has occurred in respect of the European situation since the Armistice, is the presentation of the report of the Dawes Committee and its endorsement by the Reparation Commission. It is characteristic and significant that what Governments, diplomats and politicians were unable to achieve in well nigh five years, has been accomplished in barely two months under the leadership of business men. The Dawes Report is an admirable document, business-like and statesmanlike, practicable and workable, I feel sure, if its provisions are administered by the Allied Governments in the spirit which underlies it and if it is accepted in full good faith and lived up to by Germany. It covers with exemplary foresight and comprehensiveness any contingency which is likely to arise in the course of its operation-subject only to those questions of a political nature as were not within the terms of the reference under which the committee acted.

It is greatly to be hoped that in the determination of these questions the same fairness, wisdom and recognition of the realities will prevail as characterize the unanimous conclusions of General Dawes and his colleagues.

If so, the expectation is fully warranted that this pernicious legacy of the faulty work of the treatymakers of 1919--a legacy which has been the most fateful hindrance to real peace and, directly or indirectly, the cause of vast losses and much suffering, of ill-feeling, rancour and disputes between those who had been comrades in arms and of grave detriment to the trade and commerce of the world-will, at last, have been definitely liquidated and will finally cease to plague Governments and peoples.

That Germany should ask for certain assurances and definitions before binding herself for a generation and more to the fulfillment of the precise requirements of the Dawes report, would not be unreasonable. That she should so grossly misjudge her own best interests and so fatally to herself defy the public opinion of the world as to make her acceptance, and execution in good faith, of the Dawes report subject to unallowable conditions, or attempt to juggle with it and to use it as a means to delay the fulfillment of her obligations, ought to be unthinkable; and for her own sake I trust that her Government's actions will prove unmistakably and promptly, that she harbours no such ideas.


To anyone who knew Italy but a short eighteen months ago, with its constant strikes, its class animosities, its political confusion and social tremors, the change which has come over the country is almost unbelievable.

That change must have been ripening in the souls and minds of the Italian people for a long time, but for having brought it about and especially for having brought it about without bloodshed and for having so rapidly and effectively organized its beneficent workings, the credit belongs to a great man, beloved and revered in his own country and much misunderstood abroad, a self-made man if ever there was one, setting out with nothing but the genius of his brain, the force of his character and the ardour of his patriotism, Benito Mussolini.

He is a natural born and genuinely great leader, a tremendous and most impressive personality, but wholly unaffected and singularly attractive, as I had occasion to observe, and the Napoleonic or any other pose is utterly foreign to him.

To him not only his own country but the world at large owes a debt of gratitude. If Bolshevism, Syndicalism and similar pernicious doctrines had won in Italy as at one time seemed to be imminent, there is no saying how far-reaching the repercussions might have become.

Mussolini not only met and conquered these menacing movements, he removed the conditions, actual and psychological, in which they were able to find sustenance. He went before the people not with promises and flatteries, but with a stern call for work and discipline and self-abnegation for the sake of serving the national welfare and attaining national greatness. And the people responded as they will always respond to a great appeal.

Wholly differing from those who in other countries have wrongfully appropriated the label of "Fascismo," he was far from fomenting class hatred or utilizing class animosities or divergencies for political or personal purposes. His way was precisely the opposite. He did not promise or give advantages to any one class. He called upon, and demanded of, all classes that they work together for the good of the nation.

He is neither a demagogue nor a reactionary.

He would have turned, and would now turn, against the capitalists just as vigorously as he turned against radical destructionists, if capital were to fail in its national duty or attempt to exercise undue prerogatives or seek to make the government subservient to its own interests.

He is neither a chauvinist nor a bull in the china shop of Europe. He is a patriotic realist.

He despises phrases and outworn, intrinsically insincere conventions. He is no enemy of liberty, rightly understood, but he places duties above rights and the national destiny above partisanship and resounding professions that misuse the name of liberty.

He is no dictator in the generally understood sense of the word. He holds his position and power by the overwhelmingly expressed will of the people and with the approval of the constitutional head of the State, the King.

He has substituted efficient and energetic and progressive processes of government for Parliamentary wrangling and wasteful, impotent bureaucracy.

He has fostered the spirit and the cultivation of religion which, for many years, a crude and false conception of democracy had treated with churlishness and disrespect, if not with actual animosity.

He means to have Italy contented, prosperous and progressive at home, respected abroad, and accorded that position among the great nations to which the intrinsic qualities of her people and the glory of her past entitle her. He is far too wise and right-minded a man to lead his people into hazardous foreign adventures, but he is determined that the practice long prevalent under which at the table of the Great Powers Italy was to be "seen, but not heard," shall cease.

He means Italy to be not merely a land of beauty, of ancient art and historical greatness, but a nation holding her own in industry, science, the arts and all other branches of activity, in the peaceable contest with other peoples in the van of civilization and progress.

Economically, the situation of Italy is distinctly encouraging. There is little unemployment. The frugal, intelligent Italian population is hard at work with a will and with good spirit. Property rights are respected and safeguarded. Enterprising capital is encouraged.

The Government is following the policy of taking the State out of business as much as possible and of avoiding bureaucratic or political interference with the delicate machinery of trade, commerce and finance. Adhering resolutely to sound economic principles, rejecting inflation, limiting its borrowings to a minimum, practicing strict economy, making taxation commensurate with its budgetry needs, Italy has put her house in order and, by her own unaided efforts, under the guidance of her brilliant Minister of Finance, de Stefani, is completing, with remarkable success, the heavy task of establishing financial equilibrium in her governmental affairs. She is laying well and truly the foundation for the prosperity of her people and for a great and auspicious national development all along the line.

I had meant to make a few observations concerning other countries which I visited in the course of my recent journey, but I want still to ask you to follow me in a short discussion of afairs in the United States, and time does not permit to go farther afield. (Voices, "Go on!") No, gentlemen, I appreciate gratefully your kindly encouragement, but I believe in the observance by a guest of the household rules of his host, especially when they are as wise as your rule which imposes sensible limitations upon the time of a speaker.


The general business situation in the United States continues to bear the indications of prosperity, with the exception of agriculture, especially wheat growing, and, with the further exception, to a varying degree, of a few other specific lines of industry. It is true that the pace has slackened for the time being and that a degree of hesitation and caution is observable. Certain maladjustments call for correction. Costs in some lines are unduly high. It is likewise true that competition, domestic as well as international, promises to become keener and that profits are not likely in the near future to come as easy nor be as abundant as they were in 1923. But I believe the spur of competition to be desirable for nations as for individuals and that a general level of steady, reasonable profits makes for more genuine and more lasting prosperity than does a prolonged spell of exorbitant gains, with its inevitable sequence of high costs and overproduction and reaction.

On the whole, I can see no intrinsic reason why (though the let-up and process of readjustment naturally succeeding a prolonged period of intense activity may last for a certain limited length of time), the era of prosperity which started in 1922 should approach its end, if we deal with our affairs with reasonable care, foresight and wisdom.

There is, however, one element distinctly discernible which bears within it the seeds of disturbance to prosperity. It is not the creation of natural or economic forces, but one fashioned by men. Its name is politics.

The very first essential for business is confidence. Let there be apprehension of the advent of eventualities which would jeopardize that confidence, and business runs for safety, lives from hand to mouth, ceases to venture in the present and declines to plan for the future. Stagnation and depression ensue throughout the land.

I am not one of those who habitually berate politicians and speak sneeringly of their doings. In judging results due allowance must be made for various elements of fact-such as the underlying and to a certain extent inevitable shortcomings of the political system and processes, the cumbersomeness of the machinery of government, the reluctance of trained business men to run for Congress or otherwise take an active share in public life, and the contrasting and frequently conflicting claims and interests which those in charge of legislation and administration are called upon to reconcile and get into working order.

But, just at present it happens that coincident with a fortuitous combination of conditions which has given the balance of power in both Houses of the American Congress to a small number of legislators of pronouncedly radical tendencies, three acute questions have arisen which lend themselves peculiarly to the exemplification of those shortcomings and troublous potentialities which are inherent to a greater or lesser degree in any system of popular government, and perhaps particularly so in ours as it has developed within the relatively recent past. The way in which these questions are handled and resolved will go far to make or mar confidence, and with it prosperity.


One of them is the problem of agriculture. The farmer, largely unorganized in the face of more or less organized industry and organized labour, buying in a heavily protected market,--protected both in respect of industry and of labour--but having the price of his product determined through world competition, obtaining barely pre-war prices for a large part of his output while paying greatly enhanced prices for that which he purchases and the help which he employs, is the victim of acute maladjustment in respect of some of his principal products. Adversity has come upon many a farmer while he sees industry prosperous and wages at unprecedented levels. He is gravely discontented and under a sense of grievance toward the existing order of things.

His is a toilsome calling at best, involving inevitable hardships and hazards, and usually a poorly requited one, indeed one of the least adequately remunerated among those which make up the sum total of the nation's activities. The farming business is the largest in the country. The basic and vital necessity of the farming industry needs no emphasizing. The immense social value of the farming class to the State is beyond argument.

There can be no lasting prosperity in trade and industry, unless the farmer is reasonably prosperous. There can be no stable and propitious condition in the field of politics (using the term in its larger meaning) as long as the farmer harbours the resentful feeling that he is not accorded a square deal.

It is harmful and menacing to the commonwealth that so numerous and so valuable a portion of the population should feel dissatisfied and be without prosperity. The situation lends itself peculiarly to the incitements and wiles of the demagogue and to the plausible figments of the economic visionary.

Unless well-considered and genuinely effective measures of alleviation and remedy are promptly enacted as needed and such policies put into operation as will accomplish the object in view within the limits of the economically tenable, the danger looms ahead that a large section of the farming vote may succumb to the specious persuasiveness and false promises of the well-meaning, self-deceived purveyor of political and economic nostrums and delusions, often disproved but ever resurging, or of the cunning demagogue and fomentor of class animosity.

Indeed, that danger is upon us. Both justice and self-interest demand of the community at large that every legitimate and well-considered effort be made to redress what may be found to be just grievances of the farming industry.


The second question is that of taxation. I can imagine few problems less complex, less challenging to governmental capacity, than that, of providing the revenue needed for the budgetary requirements of the government of the United States. For a nation as rich as the American, the task of raising by taxation the sum of approximately $3,000,000,000 annually ought to be both easy and simple of solution. Unfortunately, it has been made largely a political question, not--I feel convinced--by the majority of the people at large, but by self-assertive and clamorous minorities and by politicians. I need not go into details. The echoes of the controversy on this subject, which for the past four months has been going on in the United States have doubtless reached this body of well-informed men.

Secretary Mellon, with the unqualified approval of President Coolidge, has put forward a proposal for tax revision, which I believe to be scientifically sound, socially fair, economically wise. That its adoption, with minor modifications, would confer a genuine boon upon all the people and greatly aid enterprise, progress and prosperity all along the line, can hardly be gainsaid. Every test which has been made seems to indicate that its merits are recognized by a majority of the people and that its adoption is favoured by the almost unanimous sentiment of business, large and small.

Opposed to the Mellon Plan, is a combination of views and motives: Sincere, reasoned and well-intentioned divergence of conception and judgment, political timidity, opportunism or partisanship; economic misinformation, superficial plausibility, sectional or class prejudice, semi-socialistic radicalism, disapprobation of wealth per se, and so forth.

As I have said I do not mean on this occasion to enter into detailed arguments in respect of the Mellon plan or to discuss the substitute bills sponsored by its opponents. I will only mention that while all parties agree upon a large reduction in the rate of taxation upon the income of those of small or moderate means, the principal points of difference are expressed in the fact that the Mellon plan proposes a reduction of the maximum surtax rate from its present figure, i.e., 50 percent to 25 percent, while the opposing camp desires the maximum fixed at about 40 percent, and secondly that the Mellon plan retains the present rate of estate duties, i.e., a maximum of 25 percent, while the opposition wishes to raise it to a maximum of 40 percent.

The adherents of the policy of very high surtaxes base their attitude professedly on the commendable desire to promote the welfare of the less well-to-do. Yet a little reflection will show-as, in fact, the past five years have shown convincingly-that such surtaxes inevitably fortify the advantage of existing wealth and handicap those who start with little.

Within the past five years, while big business has been expanding, there has been a very noticeable slackening in the starting of new and independent ventures. Financial backers are naturally shy of such ventures nowadays owing to the disproportion between the risk of loss and the possible reward, inasmuch as the greater part of the reward goes to the Government in taxes while the loss falls upon the individual. Even if backers are found, how can the newcomer succeed in setting up a concern capable to hold its own against old established businesses with ample resources if, instead of using the bulk of the earnings for fortifying and improving his enterprise, he is compelled to turn over to the Government in cash, a very large part of that which conspicuous ability, inventive genius, daring enterprise or good fortune may enable him to earn?

As Mr. Henry Ford has explained in a recent interview, he could not possibly have gone on improving his methods, enlarging his instruments of production, cheapening the cost of his output, if in the early stages of the development of his undertaking he had been obliged to pay the larger part of his cash resources to the government in taxes. It is not open to question that high surtaxes inevitably tend to diminish competition and to intrench against the newcomer those who are in established positions.

It is a well known fact, characteristic of America--as it is of Canada--that our wealthiest men are not those who inherited their possessions but those who started at the bottom of the ladder. Heretofore the eager, venturesome, plucky fellow who would boldly set out to climb the steep road of success, regardless of obstacles and of handicaps, and who more frequently than in any other country would reach the top, was a welcome, picturesque and characteristic figure in American life. There is just as much room on top as there ever was in the United States. Indeed I think there is more room than ever before. But that figure has been far less noticeable within the past five years than in previous years. The main reason for that regrettable circumstance must be found in the fact that the road to conspicuous, material success is largely blocked to the newcomer by the barricade of the surtaxes; and the sad irony of the situation is that those who stand in the way of the removal of this barricade are the very men who profess to be--and, in most cases, I believe sincerely mean to be--the particular friends of the plain people.

As to excessively high rates of estate duties, time does not permit me to enter into this subject. I will only say that I am wholly in accord with the theory of progressive inheritance taxation, but that this problem which on the surface seems so simple and is so appealing to one's natural sense of justice, has, in fact, manifold, complex and far-reaching repercussions of a social and economic character, and that those who would deal with this matter in an offhand and sweeping way overlook fundamental and unchangeable facts.

What the outcome of the clash of contending forces in the present Congress will be, I do not pretend to know. That, for good or ill, the result will have a considerable influence upon the activity of business, the intensity of enterprise and the prosperity of the country, I do know.

Measures of economic faultiness, however well-intentioned, have been more fruitful of harm to the people, throughout history, than almost any other act of government.


The third element of possible menace to the country's prosperity arises from a feeling of apprehension based upon the generally confused state of the political situation, upon the uncertainty of the political outlook, upon the bitter virulence of party conflict and upon misgiving that certain unrefuted exposures, together with the effect of many as yet unproven but widely broadcasted rumours, allegations and innuendoes may cause the righteous resentment of the people to overshoot the mark, and that the shaft rightly aimed at abuses and guilt may at the same time hit and strike down prosperity.

I do not wish for a moment to mitigate the import of such acts of wrong-doing or impropriety as have been or may still be, brought to light. Yet, it seems permissible and indeed appropriate in speaking to you whose impressions must necessarily be based principally on newspaper reports and who are perhaps not wholly familiar with the atmosphere surrounding the proceedings, to emphasize first of all that these acts are by no means typical of our Governmental affairs which, generically, we are warranted in believing free from moral turpitude; secondly, that among the names involved, or seriously alleged to be involved, in the episodes under discussion but very few are those of business men of acknowledged repute and standing; and thirdly that, after all these months of searching and testifying, thus far, with one conspicuous and deplorable exception, no definite allegation has been substantiated against the trustworthiness of leading officials of the Government. And, likewise, with one exception, no concrete act of wrongdoing on the part of those in the secondary rank of authority and responsibility, such as Bureau Chiefs, has as yet found convincing support in valid testimony.

What does seem, besides, to have been demonstrated with distressing clearness is, first, instances of deviation from those requirements of good taste, dignified affiliation and becoming regard for appearances, as must be maintained zealously in high places if the people's respect for high office is to be preserved; secondly, among the "smaller fry" certain most reprehensible delinquencies or irregularities and infractions of the proprieties and ethical standards; and thirdly, and all too conspicuously, the creaky, lumbering, haphazard and generally inefficient working of a considerable portion of the Government's machinery under existing methods. For this last mentioned state of affairs, at any rate,--and indeed for more,--it does not seem to me that the electorate at large can escape a share of responsibility: As long as the people encourage the practice of greater frequency of elections, primary and others, than exists in any other democracy, but fail, in large numbers, to discharge their civic duty by voting at every election and otherwise taking adequate part in public life; as long as the people permit their representatives, on the one hand, to keep on, by a multiplicity of laws, to enlarge constantly and complicate and strain and centralize the functions of the Federal Government, and on the other hand, sanction the practice of changing many thousands of functionaries with every change of Administration, and of appointing many thousands of men to office by no other test but the favour of Congressmen and Senators; as long as they countenance neglect to make the civil service attractive as a permanent career, either through adequate pay or through other appropriate means, and to create in it a vigorous and compelling esprit de corps-as long as these things are permitted to continue, we are hardly justified in indulging the expectation that investigations and findings will bring really effective and lasting redress.

Our own people may safely be counted upon to exercise a fair degree of discrimination in appraising the weight, reliability and animus of the investigation proceedings by the several committees which have been and are holding hearings, and to reach a roughly correct estimate as to how much there is of party purpose and political or personal prejudice, how much of plain inefficiency, how much of inherent difficulty to administer certain laws, and how much of real culpability. In the end, public opinion will express itself in definite conclusions, and justice will be vindicated, and wrongdoers brought to book, in the calm and dispassionate atmosphere of our federal courts.

Meanwhile, I would urge that, in fairness and respect towards the American people,, those outside of the United States defer arriving at conclusions and do not permit any impressions based upon one-sided allegations to become crystallized in their minds.

You who live so close to us, must have observed the American trait of what may be termed, for want of a more appropriate term, the "headlines" spirit. Whether it be things that redound to our credit or otherwise, we are somewhat prone to be trumpet-tongued and over-emphatic in spreading them out before the public. We have the tendency to "think aloud," to react very quickly and intensively to the superficial impact of first impressions, to draw and express broad conclusions from what may be only sporadic incidents and to magnify their significance--a tendency salutarily tempered by the practice of sober second thought. In contradistinction to the rather general habit in Europe, we have the custom,--on the whole, I believe, a useful one,of washing our soiled linen very conspicuously in public, and we go at it with great relish and zest and clamour and with a profusion of soap and water sometimes quite out of proportion to the actual cleaning to be done.

It is, of course, no argument in mitigation of such regrettable delinquencies as have been brought to light in the United States, but it is a fact nevertheless which has its place in the discussion of these occurrences, that, within the past twenty years or so, delinquencies of perhaps still uglier aspect have been proved against prominent personages in public life in other leading countries, but the accompanying public notice and, in some cases at least, the consequences to those concerned, were tempered by the desire to safeguard respect for governmental institutions at home and good repute abroad, to the measurable subordination of party advantage and the distinct limitation of the exigencies of "pitiless publicity." That does not make the transgressions which have been brought to light in the United States, less bad or more pardonable, nor do I mean to offer it as an example of how such things should be handled, but it does bear a certain relevancy from the point of view of "relativity."


As to your own country, it would be not only presumptuous but also futile were I to attempt to discuss your problems, for naturally you are far better informed concerning them than I could possibly be.

The name of Canada stands high throughout the world. Its credit is excellent. Its resources and natural advantages are very great. It is producing a fine, sturdy, upstanding race of men and women. To be a Canadian, is an excellent trade-mark everywhere. The greatness of Canada's future is beyond question.

If I be asked--as, in fact, I have been asked--in closing these remarks to say a word of "sermonizing" to this assembly of representative Canadians, as a friend and wellwisher coming from a nation of friends and wellwishers, it would be this

"Take pains to understand one another's views, aims and problems--man and man, calling and calling, section and section. Seek to be fair and helpful to one another. Realize that, inescapably, you are all in the same boat, that all your problems are common problems, that the way to progress and prosperity is not to pull anybody down, but to pull everybody up, that the means towards combating poverty is not to be found in division, but in multiplication.

"While striving to enrich your country by strenuously carrying on the things of material purport, aim to enrich it likewise by cultivating those of the spirit, the things of art, culture, beauty, faith, science.

"Practice economy, both nationally and individually. It is one of the urgent needs of the day. Make every effort to have taxation reduced to the strictly necessary and to have it applied not according to political but to scientifically economic considerations. Unwisely laid or unduly high taxation is one of the most serious handicaps and obstacles to a nation's welfare and development. All taxation, however laid, is a burden on all the people.

"Beware of the glib talker, encourage the doer. Don't begrudge success or the reward of success, if gained by character and ability. The man of constructive capacity and enterprise is an asset to the community, and whatever may be the fruits of his activities for himself, much the greater benefit is bound to accrue to the community.

"The potentialities of Canada are immense. The realization rests with her people. Its attainment cannot fail you if you bend to the task with a long pull and a strong pull, as is the Canadian way, and, above all, with a pull all together."


"Pull all together!" That is indeed the keynote for the people of all countries, faced as they are with the complexities and problems which have come in the wake of an appalling war and ill-judged peace settlements. And, over and above any one country, it ought to be, and I believe more and more it is coming to be, recognized as the keynote for the relationship between the two great branches of the English-speaking family. No other international relationship-and I include the League of Nations-is comparable in importance to this: That the democracy of the British Empire and the Republic of the United States, without abating keen but fair trade rivalry, thoroughly understand and appreciate one another, sincerely mean well by one another, and move in close and harmonious contact. No other international relationship is comparable to this in good augury and potency for the peace, prosperity and progress of not only the peoples directly concerned, but of the peoples of all the world. (Loud applause, the audience rising and cheering).

SIR WILLIAM WISEMAN, on the request of the President, spoke briefly, remarking that the Speaker of the day had given an address which was really a phenomenon-light without heat. (Laughter and applause) He thought the best thing he could do for Canada would be to persuade Mr. Kahn to take enough time from his busy life to travel right across Canada--(applause)--for no one could possibly appreciate this country's resources without going from the Atlantic to the Pacific through it. Someone had said that the Almighty in His wisdom gave Canada boundless prairies whereon the greatest grain in the world could be grown, shining rivers, mighty forests, and mineral resources beyond the dreams of avarice; and then, fearing that this great accumulation of wealth might be a temptation to the ungodly, He gave them, finally, the Scotchman, in order to be quite sure that no one should ever take from Canada anything to which he was not entitled. (Great laughter and applause)

MR. GEORGE S. CAMPBELL, of Halifax, first President of the Canadian Club of that city, and President of the Bank of Nova Scotia, was asked to speak briefly, and made an interesting comparison between Mr. Kahn's wide range of talent and that of the late Sir Edmund Walker, whom he greatly resembled in his grasp of financial matters as well as in his love of art, music, etc. On behalf of the audience, Mr. Campbell thanked Mr. Kahn for a great address, greatly appreciated.

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An International Survey

The speaker's observations and impressions after a return from a recent trip to Europe, during which time he had the opportunity of speaking with most of the leading statesmen in the countries visited, and with many important men in financial and industrial life. His international survey begins with England. The fact and causes of the stubborn continuance of unemployment on a vast scale. A distinct and noteworthy improvement showing in the latest reports. England's dependency on world trade, on the prosperity and the purchasing power of the rest of the world. Causes of her loss of markets. England's debts and burden of taxes. The fine example England is setting in paying her war debts to the United States. The ways in which England is facing and dealing with her difficulties. The speaker's confidence in England overcoming her difficulties. France, and her prevailing prosperity. The lack of misgivings as to the future of France. The Dawes Report. Italy and the almost unbelievable change which has come over the country in the last 18 months. Giving credit for the changes to Benito Mussolini. An examination of Mussolini and his work. Economic and social conditions in Italy. A discussion of affairs in the United States. The general business situation in the U.S. No intrinsic reason why the era of prosperity which started in 1922 should approach its end if affairs are dealt with with reasonable care, foresight and wisdom. One discernible element which bears within it the seeds of disturbance to prosperity: politics. Three acute questions that have arisen which lend themselves peculiarly to the exemplification of those shortcomings and troublous potentialities which are inherent to a greater or lesser degree in any system of popular government. An examination and discussion of each of the three problems (agriculture, taxation, Washington investigations and disclosures) follows. Then, a discussion of Canada, with some suggestions for Canada's great future. Lastly, some remarks on "the English-speaking family" of countries and the League of Nations.