Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1917-04-14

.narl,able feature of the Wall Stree. sit
,s,,on at the moment Is the absolute calm
rsss--.the uncanny ca'mness, 1t may almost
w said-which Is prevailing at n time
Ussn epoch-marking events are of Gaily and
wuss,jhes hourly occurrence. Legislative
sachinery has been set In motion for
an early demand - though probably by
.ss,%scemeal-upon banks and individuals for
soms 81. 900 900. 900 Of national bonds and
short-term notes'
Durinr the period of the war that has
.hus far elapsed American investors have
saren back from Europe securities repre-
.sntinp American nationa, activities with
nar value exceeding 81, 500, 900 900. They
have during the same period loaned to
that have now become our formal allies an
sdditional S2,50Q,000,0s" making a total
Investment combining these two items Of
5000 900, 900.
These are huge sums that probably are
hovond the mental capacity of most persons
20 appreciate fully. What Is especially i'm
,ortart is that the new Government issues
sriI, without question be subscribed prompt
" and that any further sums will be avail
able as needed
The Administration, in the opinion of
banking authorities in New York, has acted
wisely in providing that the new bonds
shall be convertible into any new issues II
their rates exceed 3 u per cent that may
ne offered before December. 1918. Hence
thcte is no encouragement for the more
mercenary classes 10 withhold their savings
With the hone of obtaining higher rates
later on
LIQUIDATE OTHER ISSUES =
There necessarily will be liquidation of
other forms of securities to provide funds
for reinvestment In the Government issues.
A certain amount of switching will be in
evitable. especially in the high-grade in
vestment securities that are held by the
millionaire class. to whom a 3la per cent
Government bond, completely exempt from
income tax and other forms of taxation,
will be highly attractive.
Already there have been signs of such
liquidation, notably in such conservative
Investment stocks as Delaware and Hud-
son Railroad, Chicago Northwestern pre-
ferred, etc.
when it is considered that the policy of
the Administration is, far as is possible,
to be pay as you go in the matter of war
expenditures, the extent of the taxation
that is in prospect may be appreciated Not
only is 1t proposed. accord ng to Washington
sdyices that income taxation shall be raised
on the present limits of wealth to 5 per
cent from per cent. but the supertaXes
are to be increased on a much larger scale
Obviously, there will be keen incentive for
the Rockefellers, the Narderbits. the AS
tors and the newer classes of millionares to
transfer their funds from bonds that are
subject to taxation to those not subject
and that have behind them the Govern
ments guarantee and that, fur thermore
are virtually as fully remuneyative as the
corporate issues.
The income tax as at present in force
provides for per cent on all incomes above
$4,000 to $4,000 up to $4,000. After that
an additional" l per cent upon any excess
up to $4,000, an additional per cent up
to sec. 900, then 3 per cent additional up to
$4,000, per cent up to 100000 and so on
until is reached 10 per cent additional upon
"the amount by which so total net income
exeseds S2,000,000." These percentages are,
It is conceded to be very greatly increased.
Hence, if considerable parts of these large
fortunes invested in new Government
az per cent bonds. and those parts are not
subject to further taxation, the proposal
cannot fail to prove a particularly attrac-
tive one, and there will be ample funds
available
liquidation of taxable investments by these
large interests. 1t is estmated-and it
probably is not an exaggeration-that to
most of these large financial interests a
az per cent Government bond at par is
equivalent to 4 u per cent corpora te
bond in productiveness, the exact figures
depending upon the extent of the liability
to national and State taXation/ The details
rs to the rate of the new war loan, its
maturity and the amounts to be issued at
Bpeclflc PERIODS are le1t Dy Congress TO the
Treasury Department.
1t is not unnatural that the participation
In the issue of the new bonds by our
: European Allies should have eXerted a
highly stmulative Influence upon the out
standing bonds that have been placed by
Britain and France in the American mar
ket during the war period. OF the
$1,000, 100000 authorized. the proceeds of
$4,000, 100000 are to be available for invest
ment by our Government in the bonds of
foreign governments"
These bonds will be sef-sustaining, since
they will pay interest identical in amount
with what our own Government pays in
vestors for the funds Furthermore if by
reason of convertibilty 1t is found necessary
TO raise above 3R per cent the interest
on additional bonds to be issued before
December. 1918, then the British and
French and other bonds accepted by our
+, own Government shall pay the increased
rate. In other words. we are simply lend
ing our credit without profit, but without
loss
The net result upon the present issues
outstanding In our market of United King
dom and French bonds will be that there
are not likely to be additional Issues at the
n same high rates or. as would otherwise
nave been necessary. at higher rates
renee with the credit of our own Govern
ment being pooled, as 1t were, with the
credit of Britain and France and other
niiies, presumably there will be no addi-
sional issues Of Anglo-F'rench per cent
ponds which are now selling below 95, OF
united Kingdom s u per cents or French
4 government 5 " per cents. This seems the
ieai basis for the active buying movement
.nat has developed in these securities dur
Ing the week.
FAVOR SUCCESSIVE ISSUES
II the advice of fnanciers in New York
accepted the Treasury Department viii
secure the funds 1t needs for itself and for
our allies in successive offerings Of bonds
me short-term notes WILL of course. be
rken very largely by the banks and to that
f S'ent Will become in the near future
ose or less effective influence of higher
xa sss OF interest than have been current
'srlng the last few months.
= y n. mere can be no question that IL the en-
t< -. tI,000. 100000 In bonds or notes were