Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1918-10-03
GOSSIP OF
THE STREET
BROKERS DESERT
TRADE FOR LOAN
War and Liberty Bonds Put Stock
Market in Secondary
Position

There were virtually only two topics
under discussion in the financial district
yesterday = the war and the Liberty
Loan; and of the latter there was very
little in the way of discussion, but there
was plenty OF action. In fact, invest
ment houses and brokers offices. with
one or two exceptions, are devoting all
their energies to the success of the loan
and for that reason are almost deserted,
principals and staffs being on one or
another of the committees.
As for the war banker remarked
today that there is great danger Of the
people being iulled into indifference over
the continuous reports Of the Allied VIC
tories on all fronts and coming to be-
ieve that subscribing to the fourth LID
erty Loan will not be necessary III
ever there was a reason for an over
whelming oversubscription. he said. to
any Liberty Loan it applies tenfold TO
the present one. The fight is far from
being won yet. Germany's high COM
mand is resourceful, and no one knows
what lies behind the Rhine frontier
People. he continued. should vie with
our boys who are going over the top
30 Hagnlncently ana 40 every thins III
their power to boost this loan over the
top ahead Of time.
Railroad. Good Showing
When speaking yesterday about the
splendid showing OF earnings in August
made by large number of the principal
railroads, well-known investme mt
banker said the showing was largely due
TO the fact that the increase in freight
rates was beginning to tell and would
be more and more in evidence for several
months. While these rates apply to vir-
tually all the roads under Government
operation and control. he said 1t should
be noted that the best showing in the
stock market Is with such rails as are
not likely to he very much affected by "A
shifting of freight channels. II is very
much a question with investors. he con-
tinued, whether this shifting will result
in permanent injury to a road or not.
Most people believe 1t win and that
when the time comes for the roads to re-
turn to the original owners the routing
= of freight along the shortest way will
have become such habit that mer-
chants and manufacturers will insist on
retaining the system. irrespective of
whether It is for the benefit of certain
roads where the traffic originated or not
At present. he remarked. monthly
earnings as now published are merely
matters of speculative interest and not
until some measure Of compensation 4.
agreed upon and this question of di-
verted traffic is settled--which at pres
ent seems unlikely---will active trading
In rails come into It's own again.
Fourth Loan Tax Features
The Liberty Loan committee of New
England has issued a circular, prepared
by it's counsel. describing the taxation
features of the fourth Liberty Loan
After setting sorth the status of thu
bonds with respect to existing tax laws
the circular says
The House Of Representatives ha!
already passed new revenue bill. Th'
bill is now pending in the Senate.
Under, the pending legislation ia,
rates will be greatly increased. The per
sonal exemptions for individuals will
be $1,000 and $4,000 with an addtiona
$500 each for minor children and certain
other SPECIAL classes of dependents.) Th
normal tax on individuals will be l;
per cent except that the first $4,000 ne
income. subject to the normal tax, unde
the above personal exemptions will b.
taxed at per cent The surtaXes begiI
with a total net income in excess o
$4,000 mot deducting exemptions), ant
are graduated from 2 PEP cent to 65 pc
cent. Thus the maximum income ia,
rate for individuals may be II per cent
Corporations, under the pending leg
islation, are assessed a normal incom
tax of IS per cent C2 per cent in Ger
tain ,cases), and in addition are assessed
q war profits or an excess profits tax
which ever may be the higher. according
to the two methods of computation Sc
for in the bill
Under the proposed legislation a
passed by the House the normal incom
tax rate on corporations IL Is per cent
This rate is reduced to IL per cent unde
certain circumstances. The bill provide:
with respect TO domestic corporations
that the rate shall be 10 per cent upol
30 much Of net taxable income mot In
GLIDING dividends Of domestic corpora
tions and in excess Of certain credits @
which the principal items are nontax
able interest and the excess profits O
war profits taxes on the income of tn
current year, as does not exceed the sur
OF the following:
First. Amount of dividends paid dur
Ing the taxable year;
Second. Amount paid during taxabl
year out of earnings in discharge o
bonds and other interest bearing obi
cations outstanding prior to the begin
ming OF the taxable year:
Three. Amount paid during taxabl
year in the purchase Of obligations O
the United States issue after Septem
Der l, 1918.
This means that corporation ma
receive the income from its bonds O
the fourth Liberty Loan tax-free so IA
as the normal tax of IS per cent il con
cerned, and taX-free to the extent pro
vided In existing laws from war profit
and excess profits taxes, and may re
ceive certain exemptions affectin
bonds of previous issues. 1t also mean
that an amount of the corporations ne
income for the taxable year, equal I
the entire face value of the fourth Lib
erty Loan bonds purchased, may be en-
titled to per cent saving In taxes.
1t has already been demonstrate
under the existing law that very marke
advantages accrued TO corporation
holding securities which may be In
cluded In computing Invested capital
II has been demonstrated that wheths
or not security counts as investe
capital Is In many cases more tmpoi
tant than the question OF income.
Under the pending Legislation
whether a corporation Is required to 1s
ure its tax on the excess profits metho
or the war profits method. the questio
Of invested capital is or vital import
snce. Furthermore, the taxation advar
tages to be derived from invested cap
tai increase directly with the increas