New Britain herald., 1918-09-14
Henry Cleu's Weekly Letter
Especial to the Herald.)

New York, Sept. 14.-The market for securities has become more re- sponsive to important influences which so gradually have been developing in financial circles. We are at the threshold of one of the largest financial transactions in the history of the world. A new war loan of s5,000,000,000, and perhaps more, is to be distributed in a campaign lasting but a few weeks. It is true that the total of the latest British war loan ! now slightly exceeds the equivalent of this specific amount. But that ac- cumulation has been the result of many months of systematic effort, the British plan of continuous offering of bonds having proven successful.
 All patriotic Americans will agree that the necessity of making our own loan a full success must overshadow all other considerations. It's amount has not yet been announced officially, but it appears fair to assume that the treasury will seek the largest volume of funds that can be secured without imposing too great a strain. This will mean severe curtailment in every branch of financial enterprise. The Capital Issues Committee has served notice tha tuntil the completion of the campaign for the distribution of
 this huge issue of bonds it will not authorize the issue of new securities
 except such as it itself considers
 urgently necessary. In addition the committee has requested tha ton and
 after October 1st, securities that it has heretofore authorized shall not be
 sold or offered for sale until the new
 war loan has been placed with in-
 rIfn o1y
 nors have taken steps to supervise
 loans of members, and thus prevent
 the use of funds in undesirable specu-
 lative operations.
 These are features suggesting continued strain in the money situa- tion. The main consideration at the
 moment is to provide an adequate supply of funds in order that the stock exchange, as a safety valve, may
 continue to exercise it's valuable func-
 tions and continue to keep in liquid
 form large proportion of the wealth
 of the country. There is no reason
 to doubt that traesury and banking
 officials generally recognize the need
 of such protection and will be pre-
 pared to see that money supplies suffi-
 cient for this important purpose con-
 tinue available. This does not mean,
 however. that banking accommoda-
 tion will be supplied in amounts to permit injudicious speculation. One
 of the main functions of the New York
 stock exchange is to furnish a market
 where securities representing our
 natural activities may be bought and
 sold, a market where lenders know
 they may sell collateral at the full
 market price and without delay in the
 J
 agreed It is a market place where
 interests who are pressed for funds
 may turn securities into cash without
 loss. In this way the exchange occu-
 pies a position as a permanent regu-
 lator. It performs one of the most important functions in times of stress such as those through which we are passing at the present moment.
 Secretary McAdoo has taken wise action in adding to the attractiveness of the Liberty bond issues which have already been sold. These bonds, of whose soundness there never will be question, are nevertheless called upon to compete with securities much more attractive in the form of actual in- 1 come return. While there has been a wonderful patriotic response to the various offerings, there at the same time will always be disposition to purchase outside investments. All government bond issues thus far mark eted are specifically exempt from 1 the normal income taxes But the first l issue alone-the 1-2's-is complete l ly exempt from surtaxeS. The second | and third issues are exempt to the l extent of the interest payments on a 1 single holding of $5,000. The secre- 1 tn a mum exemption on these issues of 1 $45,O0O, based on an amount one and ] one-ha1f times that of the bonds of 1 the Fourth Liberty Loan originally | subscribed and still owned at the time l of the tax return In addition, MT. | McAdoo proposes an exemption of the 1 interest on a holding of $30,000 of the new issue now about to be announced. i Of course, as the limits of exemption are widened on the other bonds the 1 complete exemption privelege of the i first becomes to that extent neutral ized a feature which was reflected by a slight decline in the quotations for the First Liberty Loan coincldent with advances in the later loans. However, with the prospect of 8 protracted con- tinuance of heavy taxes and the grad ual conversion of the bonds into those carrying a higher rate of interest there will without question continue demand for the tax exempt 5 l-2 per cents.
 In view of the importance attach ing to the taxation problem, public attention has become largely concen- trated upon the Revenue bill, which
 LIMITATION OF CLAIMS.