New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-08-21
Banker Praises
Surtax on Income
From Govt Bonds
Strain on Money Market Is
Lessened by National Con.
troll of Wheat Crop

Judging from the numerous confer
ences yesterday among bankers and
others who are to take an active part
in the distribution of the forthcoming
instalment of Liberty bonds, it would
seem that some definite announcement
from Washington concerning the date
of the new issue is expected before
long.
The proposal to have the new bonds
bear interest at per cent, but subject
to the supertax under the income tax
law, is exciting a great deal of dis
cussion in financial circles. One
banker stated yesterday that this seems
to be a more scientific and equitable
arrangement than a tax free 81 per
cent bond, and he predicted that the
new bonds would make a stronger ap-
peal to the public generally than did
the present issue.
VIII Attract Small Investors
"For one thing" he said, "a per
cent rate, being the same as is paid
by savings banks in most sections of
the country, will, believe, induce a
larger amount of investment in the
new bonds by people of smaller means
than did the last issue. On the other
hand, a surtax feature would no doubt
ROB the next issue of some of its attrac-
tions from the viewpoint of the per-
son with large income, for, whereas
the present tax exempt 81 per cent
bonds yield in many cases as much as
the net return on taxable securiti4p
with gross yields of s or Z per cent,
the income from the new bonds under
the proposed arrangement would prac-
tically be the same to all. In other
words. the rich man would have to be
content with per cent return on
his investment as well as the person
in humber circumstances. The pro-
posal of the Secretary of the Treasury,
it seems to me, should not be criticised
on the grounds of class legislation. Non
the contrary, surtax would make the
new bonds more democratic in spirit
than the tax exempt issue now out
standing"
Distribution of the wheat crop this
season through the National Food Ad-
ministration Board, bankers here be-
lieve, will have the effect OF relieving
the money market from much OF the
strain which in former years has been
imposed by the demand for funds TO
finance the movement of grain from
the farms into channels of consump-
ton.
Bank Aid Unnecessary
The government. through the opera
ton of the vast machinery for estao-
fishing credits. which has been set in
motion at Washington, will, 1t IS
thought, be able to raise the funds
necessary to carry out its plan for con-
trolling the wheat supply without MAX
ing a direct appeal to the banks. AS
a Consequence, the banks are expected
10 be in a much better position to
finance the next offering OF Liberty
Loan bonds than would have been the
case if the wheat market had been
allowed to remain an open" aft air and
the farmers grain dealers and nour
milIers had all been forced to look to
the banks to provide funds for crop
moving purposes. as in past seasons.
These demands, it is pointed out
would have been especially heavy this
wear. owing to tho exceptionally hlgh
prices at which wheat is selling.
The feeling in the money market con-
tinues easy so far as demand and short
term loans are concerned, but efforts
TO borrow for the longer periods dis.
close a disinclination on the part OF
bankers generally to make such loans
and a tendency to boost the rate IN
cases where borrowers are lnsistent'
The hesitancy to lend Tor more inan
siytv or ninety days. bankers explain,
Is because of their desire TO be fully
nronared 10 meet all demands upon
tbe;r resources arising out of the gov,
ornment's next war financing move and
because of the ready convertibility OF
~ leans