Evening star., 1917-12-05
WANT LOANS AND BONDS
COMPUTED AS CAPITAL
BY I. A. FLEMING.

BY I. A. FLEMING.
Attorneys of the American Investment
Bankers Association have presented
briefs to Representative Kitchin. chair
man Of the ways and means committee
of the House, in support of a plea 1or
an amendment to that section of the
war profits act relating to bonds, de-
bentures and borrowed money, the law
holding that these items do not count
as invested capital.
This feature of the law cannot De
remedied by construction of the iaw'
but will have to be chcanged, II at all
through amendment 1t is held by busi-
ness men generally that borrowed money.
obtained on the credit or coliateral OF
the borrower. and placed IN the business e
activities should be held as part OF the
invested capital Likewise the bonds.
either first mortgage or debentures'
should be considered as part of the capi-
tai. as 1t really is.
money Invested in his business and
SEQ. 600 of borrowed money. he is taxed
so per cent of everything he makes
above $500, after paying interest," on OF,
his debt Out of the income OF SZo,ooV
he must pay s5,40o at per cent. ana
has an income of s14,600. on which ne
must pay a tax of S4,6So
business
that he has 100000 of his own money
invested in his business, is not taxed
on ANYTHING under $4,000, and then on
a graduated scale. so that on s-o,ooV
profit the tax would be but S1,f5o
great railroad corporation with
stock capital largely. and one with the
chief capital in bonds, the latter would
pay taxes two-thirds greater than the
former.
The act penalties the borrower A
Young man with good credit as result
of character is greatly handicapped
by the ruling. If he starts on borrowed
money entirely he is taxed ohe-haii OF
his earnings.
"In effect on corporations" says the
brief, "the tax penalties financing by
stock and bond issues. although in
each case the real ownership and net
income go to the common shareholder
who has to pay the tax
The association desires to have bor-
rowed money and bonds and deben-
lures treated as part of invested in
come, and Washington business in
terests believe that this should be done,
IN plain equity.
An amendment was introduced in the
House yesterday seeking to repeal sec
tion 209 in the second income tax law,
which has been frequently referred to
as "a joker
For Closer Cooperation.
The American Bankers Association
pointed committee to bring about
closer cooperation between the diff
ferent state associations and the ma
tional organization.
This committee has made report and
has appointed each secretary of a state
organization on a committee to further
co-operation in all things of general
interest to the banking world.
Local Bankers Association.
: At a recent meeting of the executive
council Of the District Bankers Associa-
and II. H Mckee were appointed a COM
mfttee on trade acceptances.
This committee will cooperate with the
Association Of Credit Men and the Ameri-
can Bankers Association in a campaign
OF education to increase the use of trade
acceptances. the most favored form of
commercial paper. which has been used
more freely by large importing corpora
lions since the outbreak of the war.
The federal reserve board favors
trade acceptances in rediscounting.
The application of the Central Saw
1ngs Bank and the Northeast Savings
Bank for membership was favorably
acted upon.
Redemptin Of Certificates.
The Treasury Department again
calls notice to the fact that $500, 600, 900
Treasury certificates. bearing date of
s9ptSHoef - anu maturing december
10, have been called for redemption
December s. at par and accrued inter-
est On and after December interest
on these certificates ceases
Cause of Stock Slump.
The cause of the slump in New York
stocks late yesterday and again today
u admittedly the suggestion in the
Presidents message relating to the
necessity for further price-fxing.
1t was the first time in many years
the delivery of the message for an
1nkling Of its contents. and great in
terest was shown In it. Leaks have
been common heretofore.
Capital Traction Shares Active.
Quite large business, comparatively,
was transacted in Capital Traction
ehares at todayS session of the local
Stock Exchange. At the opening the
shares sold at 80, broke to 81 and grad
ually to so. where Is Cares sold in
lots and thereafter Iv ov1a, with the
last sale at S0Z.
4he price at the close yesterday was
S05s bid. SO that, while the opening
was strong and higher, the net change
wAe unimportant.
Aergenthaler Linotype stocks sold at
129. which would equal 1874 with the
regular and extra dividend on, show
ing more or less weakness. The clos
ing was with 12s bid. 129h asked.
a small amount of Columbia National
neglected.
Bankers Get Bonds.
Most of the banks have received
large supplies of new per cent bonds
ana are making deliveries to buyers.