Evening star. [volume] (Washington, D.C.) 1854-1972, 1902-11-29
MR.. HEPBURN'S REMEDY
WOULD PUT PRoHIBITIVE TAX
ON WATERED STOCK.
How He Would Meet the Evils Of
Trusts Not Formed for Legitimate
Purposes Of Trade.

A prohibitive tax placed on the watered
stock Of corporations, this tax to be levied
and collected by the machinery provided
for the collection of the internal revenues
of the government Is a. remedy proposed to
meet the trust evil which Representative
Hepburn of Iowa believes would annihilate
that class of combinations formed not for
the legitimate purpose Of trade or COM
MERGE but for the sole purpose Of making
money out Of stock values.
And this Is exactly the form Of trust
that causes all Of the eyil,'' declared Col.
Hepburn in discussing the subject with a
Star reporter. ~ len you take away the
opportunity of the professional promoter
of getting rich simply through the organ
ization of a trust and the issuance of enor-
nous quantities of stock based on nothing
but the visionary dividend earning capacity
of the proposed enterprise you Will at once
put an effectual end to such organizations
I'm my opinion a prohibitive tax on the
stock Of every corporation which Is not
representative of substantial value would
wipe such corporations out OF existence,
and when that was done combinations
would be made only for the legitimate
trade advantages which could be secured.
Combinations Of the latter class in my
opinion, are not harmful.
las an example, take Mr.. Morgan
steamship merger. What motive did Mr..
Morgan have in engineering this gigantic
scheme through II 1t were not for the great
profit he could derive. not through the
legitimate business of shipping, but through
the issuance of stock based on the combina-
ton. If the matter were analysed it would
be found that Mr.. Morgan Is not posted,
or even interested, on the conditions gov
erning the actual business of the navigation
of the Atlantic ocean. He, as a profession
al promoter sees chance to make great
combination on which a fabulous amount
of stock can be issued and sold, and
through which incidentally Mr.. Morgan will
reap an enormous profit.
THE motive for the railroad mergers will
be found to be the same. and it is this
gambling on the possibilities Of enormous
profits which becomes at once the money
making end of the trust and not the legiti-
mate earnings which should be the real
for the combination and the real
source of the profit
How would you put your idea into OPP
eration?"
Simply give the collectors Of internal
revenue authority to fix value on the
stock of corporations the same as they
place value on liquor and cigars, have
the tax on the stock which did not repre-
sent actual value subject to a fixed tax
This fixed tax In every instance to be suf-
ficiently high to make the existence of such
stock impossible.
'In order that no injustice might be done
and that the right Of appeal might be had
from the decision Of the internal revenue
collector, provision should be made for a
special board of appeal. and even the judg-
ment of this board might be appealed from
to the federal courts. This, in my juds-
ment would be ample machinery and a
practical method of reaching the evil effects
of trusts.
ut, however. Is remedy which has oc-
CURED to me during the past few months,
and beyond thinking 1t out along the lines
1 have suggested 1 have given 1t no careful
research. Whether it would meet the ideas
of Congress whether / shall present it
in the form of bill for consideration / am
unable to say