Evening star. [volume] (Washington, D.C.) 1854-1972, 1917-07-08
By I. A. FLEMING.

Bond dealers, brokers ana holders OF
securities generally are very much In
terested In the rate Of interest which
the next government bond issue will
bear.
They expect and hope for a repetition
of the az per cent rate. and believe
that the issue can be readily foated
being encouraged by the fact that the
the general disposition Of the investing
public to get back Of the government:
This latter disposition was RESPONSE
Bile for the unlocking Of safeay deposit
vaults and the liberal selling OF high
grade securities, stocks and bonds COM
Ing from hiding places Of long stand
ing, with the natural effect OF weaken
ing the bond market and railroad Sc
curities; for munition and like stocks
have not been in hiding places.
Another feature that favored the lib
erty bond issue greatly was the fact
that the bonds are not subject to the
personal tangible or Intangible tax
to income or other tax save the 1nheri-
lance payments.
One reason why bond interests favor
the continuation Of the 3h per cent
rate is that 4 per cent rate would
play even worse hob with older bonds
and other securities than did the liberty
ing Of taxable investments for tax-free
securities that 1t would materially dis
turb the equilibrium OF the entire So
curity situation.
with the income tax on a per cent
normal basis. tho Intangible tax 4-10 ir
many places and $40 IN the District o.
Columbia. a per cent tax free bono
would be so desirable that investors
and the wealthy people OF the country
would bid for almost any amount OF
the bonds. especially with the pledge
Of the credit Of the United States back
Of them.
During the liberty loan campaign
bond houses were compelled to await
the completion Of the sale before en-
gaging in new ventures.
With commendable patriotism they
willingly abandoned their business and
loan field. the whole campaign being
magnifcently managed through the eff
forts Of the banking fraternity; this
bond houses, the reserve banks by their
aid in financial operations and by tens
Of Thousands Of good citizens Eivine
bonds go.
The education, the creation of an
army Of investors who understand the
difference between a bond and q share
ally invest in bonds. was the only re-
ward OF the bond houses and their
salesmen-other than personal salts
faction.
A Feature Of Local Conditions.
The shifting Of bond holdings has
been a feature Of the local security sit
uation as much as Of the bond market
from . general viewpoint.
The possibility of a change in the In
come tax law so that the corporations
and others contributing to an income
will report income at the source in
stead of deducting the tax. as under
tho present law. offers food for thought
for investors.
Investors with incomes under the nor
NAL limits Of the tax, $4,000. under the
old law. are not used to having to pay
the tax on incomes derived from bond
interest. but the change to informat ton
necessary and relieve tho corporations
very generally.
Discuss Investments With Bankers.
All of which emphasizes the necessity
of discussing the fine points of in
vestment possibilities with bankers be-
fore placing your money.
Had this habit been practiced very
generally in the years past many
boxes might have been eliminated.
Bankers not infreQuently go wrong on
investments. but not very often-it is
impossible to be right all the time, just
as it is to fool investors all tho time
but given the facts. the main facts In
the case and the truth-as bankers can
give; the investor cannot go very far
in the wrong.
Steel Corporations Excess Earnings.
But few people have any real idea
of what the excess profits taxation will
mean to many corporations-indeed
there Is still doubt rs to the actual
schedule.
The excess earnings Of the United
States Steel Corporation as worked out