New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-05-09

that II is now loanlng at premium.
n. L. Amster, Of the Rock Island,
explains the decline in the market
value Of railroad securities this way:
The decline is certainly not be-
cause Of poor business or poor gross,
as both are on the up grade. Be-
sides, there are many favorable de-
velopments tsing place which should
strengthen rather than weaken rail-
road securities. The entire country
now admits the justice Of the 10 per
cent increase in rates TO Offset a
portion Of the increased cost of la
Dor, fuel and supplies.
Among the favorable developments
are the eff1ciencies and economies
advocated by the special committee
of five Of the National Council OF
Defence, such as the suspension of
the full crew law, cutting out dupli-
cate and unnecessary passenger ser
vice, and eliminating or combining
fast train service, that will release
locomotives and cars for more i'm
portant freight service.
These changes have been the cry
and demand of railroad managers for
some time, but it took just such
crisis as this to make the public un-
derstand their need and approve of
them. These economies will not only
speed up transportation, but will
favorably affect the net income.
The prime reason for the decline
in railroad securities, especially those
Of the better class, can be found in
the proposed income tax bill. This
may levy tax of from SIS per cent
to 90 per cent on personal incomes
of S25O,OO0 to 100000. Many Of
our large incomes are derived from
holdings of large blocks of railroad
securities. Assuming that an indi-
vidual or estate owns $2O,OOO,OOO of
railroad bonds or shares-yielding
an average Of, say, 6 per cent-the
annual income would be about 81 ,200,-
600; the income tax takes possibly
100000, making the net return only
8 per cent. If they changed these
railroad securities into 80 per cent
government bonds, they not only
would get y per cent additional in
come, but security of far greater
stability.
The large holders are exchanging
for the 81 per cent tax-exempt Lib
erty Loan. 1t would be infinitely bet
ter if the bonds carried Az per cent
or per cent interest and were sub
ject 20 the income tax. They would
still net 81 per cent. The security
market would not then have been
upset.
As it is now, the 81 per cent tax
exempt bonds will indirectly figure 5
per cent or 8 per cent to people who
must pay large income tax and
only 3'2 per cent to people of the
poorer classes, whose income is
small and who do not have to pay
large sur-tsxes. Khis is a decided
disadvantage TO the people Of small
incomes, and is bound TO cause con
centration of these bonds into the
hands ~ tho ver1, rich
We may, however, hope that these
differences will be adjusted so that
the poor man with the small income
may be placed on the same footing
in buying war loan bonds as the man
with the largest income. This will
tend 10 keep the market for railroad
and high grade industrial securities
from being demoralized. which is
bound 20 be the case if the govern
ment issues taX-exempt bonds.
The munitions business is on the
decline in Canada, just as it was in
this country before the entrance of
the United States into the war in
jocted new life into the industry.
The Imperial Munitions Board in
Inmates that manufacturers may