Evening journal., 1917-06-27
Financial Power of Americas Small
investors
investors
lFrom I'd New York sud

The vanishing OF a billion Of taxa
bio income which is to be feared II
supertaxes taking half the incomes
OF large fortunes should drive them
into nOn-taxable Government bonds
brings another inquiry on the sub
iect:
ITO the Editor OF The sun-sir.
] have been much interested in your
discussion Of the shifting Of income
under excessive taxation: I'm the re-
marks to you of L. A Wagner, and
In your example that IN the savings
banks alone there is an investing
power made up OF very small units,
but amounting altogether to more
than $4,000 1000. 600.
You should mention other invest
ing power capable OF taking I'm small
units the bargain offerings Of large
investors If they try TO get rid Of
their ordinary securities so as to
escape the excessive supertaxes.
1T would take $4,000. 0O0,O 900 Of
small investors to buy from the big
investors securities giving, on a 8
per cent basis a billion OF return to
the smallest investor
This $4,000, 100000 OF savings de.
! posits makes a good start toward
| S2O,OOO,0 000 but there IS still a
| long way 20 co. And do not forget
that all the savings bank deposits,
or anything like all. could not be
shifted out OF the savings deposits
INTO gilt edged securities bought at
bargain, or into Government bonds,
for that matter, or into anything else
without disaster
"a C. G.
New York June 49,"
The principal large groups OF small
investors whose combined financial
power is prodigious are. besides the
depositors in savings banks, the in
surance policy holders. the farmers
and the general investors in shares
OF railways and industrial corpom.
tons IN small amounts
The policyholder is an investor
primarily on the installment plan and
Tor the benefit OF his heirs But his
installment investments for the bene-
nj Of his heirs give him a further in
Nestlng capacity again on the Install
ment plan, because Of the security of
his policy. He has the courage to buy
a home for his family on the install.
ment pan-a mortgage which he can
reduce out OF savings because he
need not fear that in the event of |
his death, his earning power lost to |
MS family, the property will be sacrf- |
need through the inability of his fam
lly 10 pay the interest or meet the |
principal OF the mortgage. In the
same way he has the courage and he |
has the means TO buy sound securi. /
ties on the instalment plan. being /
NNNUTnH that fr no uh9s41a N.-F
the final payments are made by aim
they can be made by his heirs out
of the insurance funds.
And so, contrary 70 the talk we are
always hearing about tho danger 10
ones family OF borrowing ca insur
ance policies. It has come 10 be an
axiom In financial circles that per
haps the greatest single financial
power, direct and indirect. in the
United States IS lodged in the vast
numbers Of policyholders. For as a
banker has expressed it, the heroic
soul that on the average can and will
deny itself indulgence to pay insur-
ance premiums for the benefit OF a
wife and children will on the same
average likewise deny itself further
Indulgence to pay other instruments
OF other investments for their benefit.
In the United States there are life
insurance policies i'm force to tho eX-
tent Of considerably more than $780,
100000. 900. Now this does not mean
that there IS $4,000. 100000 or half
of that $4,000, 00O0 900. or anything
like it thereby available for invest
ment by the policy holders In the .
first place there is included in that
more than SS0,O0000O000 of insur-
ance several billion dollars OF So
called industrial insurance which
seldom, IL ever represents an equity
OF any moment In the policy or EN-.
braces with It borrowing capacity on
the policy In the second place. in
cluded I'm this more than $50. OOO. OOO-
600 OF insurance policies are the poll
cles of business and assessment com
panies, which, generally speaking,
may be excluded like the so-called in.
dustrial policies. But if we eliminate
all those from consideration there is
very likely left ordinary insurance
OF half Of the $4,000 100000. This
Is not all insurance value" except
In the case Of death, but II only one.
shird OF this sum, or one-sixth OF the
whole amount of insurance in force.
were available for use by the policy
holueis themselves, hero would be a
direct financial power in their hands.
TO be exercised in borrowing cana
city. Of some $4,000 900 900. not 10
speak Of the investing power by
benehciaries OF some S75O,OOO 600
directly paid out annually in cash TO
them as policy holders die.
singuarly enough, except in the
case Of industrial insurance, general
policyholders are not numerouslv .
represented in the savings bank de- :
posts OF the country Indeed the !
main savings bank deposits are pc.
cul'ar not only as to class Of persons
but as TO locality. The savings bank
depositors not only are very largely
made up of minor mechanics and do
nestle servants. but are to an extra.
ordinary degree concentrated in the
Eastern States SO there is a mini
mum OF dovetailing between the
policyholders of regular insurance
and savings banks deposltors
Likewise the farmers OF the conn.
try. particularly In the great West
are not much more partial in their .
investments to insurance policies
than they are IA cnvfnuc b,-f- ~