The Washington herald., 1914-03-07

Copyright 1915. by c. 81. Keys, New Yoral
In January and February a very large
number OF people were added to the lists
OF the houses that deal In conservative
bonds. dealer I'm New York. struck by
the number Of new customers who came
in to see him and who told him chat they
were new buyers In the bond market. de-
veloped a srear curiosity to find out just
why these people, who had always in
vested their money I'm other forms Of
security and other ways, had suddenly
oecome buyers OF bonds lie determined
10 ask the point-blank question of the
next few strangers who came in seeking
bond investment.
The first new customer of this sort hap
pened to be n minister. His Investment
was not large. and the total sum Of his
money invested in all forms would not
make him a very profitable customer for
a bond dealer. The banker. however.
makes a practice Of treating all custom
ers as nearly alike as possible. and he
started his inquiry with the minister
somewhat with surprise his curiosity met
setback at the outset but in the course
OF time the customer thawed out enough
TO let his real reason for buying munich
pal bonds become known
Il am located he said. I'm A small
town where everybody Is very curious
nave always kept my small funds in
vested in mortgages in another commun-
lty, the place where, I was born and
brought up. Now ! have been told BY a
irlehd OF mine that since my mortgages
are all small ! may be compelled by the
local tax authorities to disclose what /
have under the income tax law. I am
not really taxable. but I suppose / will
have 10 make report. and so I am dis
posing OF my mortgages and buying mu-
nicipal bonds because that is the only
form OF security that will be proof
against the curiosity OF small COM
munity."
That was curious discovery to the
banker After his visitor had gone nc
called an empluye of his Office to find out
Nhether such AN investor would find il
n, ccssary 10 make a return al all. He
then discovered that under certain cir
cumstanccs nc might be, particularly il
there were an impression i'm his COM
munity. shared in by the Federal taxing
authorities In that section. that he had
an income larger than his annual stipend
The whole incident raised the question
III his mind as to how much actual buy
Ing Is going on at the present time in
the bond market which is not normal
demand or likely to be rcCurrent year BY
year but which presents an adjustment
OF account Of the vague and incomplete
public understanding OF the law.
Tho secOrd new investor who confessed
that he was a novice in bOnd-buying was
a wealthy manufacturer who also wanted
10 buy municipal bonds. lie was frank
I" admit that his reason was two-folG:
First. that IL was about the only class
OF security he could find that would en-
able him to avoid paying a very heavy
surtaN OF his annual income. and sec
ond, that he lived in New Jersey and
was afraid that il he made a return of
his wealth in fun the local taxing au.
thorities being very friendly with the ad-
ministration in Washington, might get
hold of his return. lie frankly admit
ted that he had never paid his full share
Of taxes in New Jersey and did not
intend to long as he could help il.
because. as he said. Il think / would he
about the only man Of any considerable
wealth in the State who did it."
The next visitor to the Office was a
woman of small means. whose available
resources for investment amounted to
81 SO When she was asked the same
question she ,Iesitated at first, and then
admitted that the $3.50 was all
she had left oUt of S1o.Oo0 left to her
five years ago. The remainder had been
lost in buying fancy promotion stocks
and other stocks selling on the stock
exchange at very low prices. She had
been unfortunate enough to write to half
a dozen brokers OF very doubtful char
actcr and 10 have faIlsn into the traps