Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1917-08-04
WANT HIGHER RATE
ONNEW U.S.BONDS
Wall Street Does Not Favor
Another Issue at 3R
Per Cent
HAS BEARING ON PRICE

| NEW 1ORh. aug. '.
Wall streets chief interest at the mo-
ment centers around the demands Of the
| Government In a war sense. this taking
into consideration the proposals as far as
taxes go and the money which will be
| needed to carry on the war. The expendi-
| lures OF the Treasury Department are large
| enough to cause CONSERVATION, even If
| viewed from n proper angle, and what is
| happening Just now is a tendency to enter
| into an unnecessary panic In this direction :
| l. O., to confuse appropriations with the
| Treasurys methods Of obtaining the funds
| 10 meet he appropriations.
| II does not appear to he widely recog-
nized, as It should be- that the two items
! are quite distinct and that IL both are
| included as war costs are virtually
duplicating our figures. Thus. the $1,000
! 100000 in Liberty Bonds and certificates
| OF indebtedness as authorized by the
original war revenue bill. will provide S3-
| OOO,O0O,000 in the form Of loans to our
! Allies, The remainder will be available to
meet expenditures under the various bud
gets provided by the Cabinet members Ger
tainly, expenditures are large enough with
out, as seems to have been so frequently
the practice In Wall street of late adding
the methods of collecting revenues to the
actual expenditures.
few days will be sufficient now to FUR
nsh Information of a practical nature as to
tue pollcS AT washington IN the price fixing
campaign that has been announced bv prrsi-
dent Wilson. In the usual unofficial yav
which Is SO common to intercourse between
washington and Wall street there have been
lntlmations that prospects for fair treatment
OF our manufacturers in the matter Of prices
are much brighter than was the case a
fortnight or even n week ago
Sentiment. Of course. is not unlikeIv n
change overnight in this respect But AT the
moment industrial leaders are convinced
that there has been a change of attitude
In Washington as to the percentage of profit
that can he considered Just In wartines
to quote President Wilson's recent statement
on this subject
limitations have been received fro,,
Washington that a much more liberal price
Is TO be fixed for iron and steel and conner
than the Government was inclined to pay
a snort time ago. Furthermore, there will
be no disposition to await an exhaustive
inquiry into the cost problem by the Federal
Trade Commission,
A basic difficulty has anpearod IN tho
latter course. Cost varies in different COM
pahles, ana one basis cannot be established
LOT the entlre country. This matter has
Deeh explained In detail at Washington and
there Is reason to believe that the authori-
ties have been converted to the view that
there must be profit as well as patriotisn
u production Is to be speeded up TO meet
the necessities of the war
wan street mas ABOUT come to the con-
cluston that II would not be desirable for
the Treasury to attempt to bring ont a. nav
Offering Of the Liberty Loan as officially,
announced for November Is on a 3i6 ner
cent basis which is the rate of the Offering
OF June Is. Since the alotments were made
the quotation of the new bonds has been
shade below par on the Stock Exchange
Hence n new Offering in November would
be under the most distinct handicap pos
sibe. namely, that investors could go right
TO the Stock Exchange market and pur-
chase identical securities at shade below
the figure the Government was Offering the
newer ones for.
The interest rate for the Liberty Bonds
was definitely established by the legislation
authorizing them; that Is to say the figure
was established at mot to exceed 80 per
cent The amount authorized by the act
was $4,000 900 in Liberty Bonds and
$4,000 600 in two-year certificates of in
debtedness. The rate on the latter also was
confined to az per cent
The net result is that should the Treasury
Department find that IT is not desirable TO
take the risk of a second Offering at 81
per cent 1t would be called upon to go
before Congress with request for enabling
rate Of, say, per cent TO be paid One
direct effect Of this would be to automat-
ically raise the rate to the same basis on
the Liberty Bonds that were sold under
the offering of June Is last benefit that
scribers to the Liberty Loan who have not
sold out their alotments.
This is n factor that all will concede
must have direct bearing upon the gen
era price level of stock Exchange securi-
ties. If our Weather classes. for instance,
who are to be severely taxed on income
account. can transfer their funds to a net
basis of per cent by the purchase Of
Liberty Bonds, they not going to retain
permanently other securities upon which the
net return is not so favorable. IT, for in
stance, take "A per cent bond selling at
par and figure that the surtax upon certain
parts of the income of millionaire holder
will amount to 40 per cent, then such a
bond would net only per cent, besides
which there must be reductions for other of
the ordinary taxes Consequently, a Gov
ernment bond paying a net return of per
cent would constitute highly attractive in
vestment for these classes. This, in turn,
would mean the sale of Stock Exchange
securities that are subject to taxation. In
order to reinvest the proceeds in Government
bonds. Hence. the higher rate the Govern
ment pays the greater will be the liquida-
ton of railroad and other securities on the
Stock Exchange.
Signs are becoming quite distinct of a
reactionary tendency in general trade and
industry. There is no actual slowing down
of production, since the mills have under
contract orders to keep their full capacity
engaged, in many instances for fully the
balance of the year, What is really notice
able however. is the lack of Initiative In
placing new orders, especially In connection
with building operations.
This is a development that Is not alto
gether unnatural in view of the uncertainty
of the approaching cost Of material The
Presidents speech on patriotism a few
weeks ago Is responsible In large measure
for this spirit of indecision that is develop
Ing Obviously II the Presidents ideas in
regard to prices are forced into general
use 1t will only be short time before
structural material can be purchased at
substantial concessions from the present
figures.