New-York tribune., 1918-06-08

Stolidity in the face of news that
ordinarily would produce wild gy-
rations is becoming characteristic of
the stock market these days. Yes
terday it was almost unmoved by the
presentation, in broad outline, of
the Administration taxation pro-
gramme, calling for imposts that
will, if Mr.. McAdoo's suggestions
are adopted, absorb about one-sixth
of the nations income. Prices de-
clined a little, and the volume of
trading was small, but there was
nothing like general selling move
ment. Nor are there likely to be
unusually violent fluctuations as the
tax legislation is slowly and painful
ly constructed in Congress. The
general trend of prices may be grad
ually downward until the legislation
has beca completed, and it would be
surprising if there were not spas
modic selling in particular groups
OF stock as proposals affecting
them are unfolded, but on the whole
rnost observers believe that the mar
ket will receive developments in the
programme with reasonable tran
guilty. On the other hand, it is
quite likely that dealings will remain
relatively small in volume, except for
occasional outbursts of activity.
tWall Street men accepted the Nc
Adoo statement calmly, and with
very few exceptions they approved
of it, in general way. 1t is recog-
nized that heavy taxation is inevi-
table and all that hnanciers and in
dustrial leaders ask is that it be i'm
posed as equitably as possible. Even
the proposal to levy higher taxes on
unearned than on earned incomes is
approved by some of those who
would be seriously affected thereby.
But there is one point in the Secre-
tary's letter in this connection with
which there is general disagreement.
Mr.. McAdoo, after suggesting
heavier imposJ on unearned incomes,
said that
Income derived from Liberty bonds
would be exempt from this taxation,
and the returns between income from
Liberty bonds and income from other
securities would be readjusted with
out increasing the rate of interest
on Liberty bonds. 1t would not tax
the patriotic purchasers Of Liberty
bonds on their holdings, but it would
weigh heavily upon the shirkers who
have not bought them. 1t would
make the return from Liberty bonds
compare favorably with the return
from other securities. 1t would give
the governments bonds an essential
and necessary advantage over those
of corporate borrowers and would
very greatly decrease the relative ad-
vantage which state and municipal
bonds now enjoy through the total
exemption which they carry. 1t
would produce gradual readjust-
ment of the situation in the invest
mcnt markets instead Of an abrupt
one, as would be the case if the in
terest rate on Liberty bonds should
be increased.
And further:
There is a widespread feeling that
many people who are able to do so,
especially those who are making vast
profits out of the war, are not do
ing their part, either in the purchase
Of Liberty bonds or in the payment
of taxes-that they are investing in
corporate stocks and bonds produc-
ing high returns instead of In the
bonds of their own government, pro-
ducing reasonable returns, when the
first duty of patriotism and self
protection demands that they shall
buy government bonds for the pro-
lection of the nation in it's hour of
peril. There is natural feeling
among the masses of the people that
taxation upon incomes and upon war
profits should be high enough to
bring the return from corporate in
vcstments more nearly on q parity
with the return from government
bonds.
We do not see how any such thing
as Mr.. McAdoo has in mind could be
accomplished through taxation. No
matter how heavy the imposts might
be, they would have no tendency at
all to bring corporate bonds closer to
parity with government bonds than
they are now; nor would the read
Justment be any the less severe than
1t would be were the rate of return
on government bonds increased
probably the contrary would be the
case. The readjustment would. in
TACT, be almost automatic. Ineyi-