davidaulloa/AmericanStories huggingface dataset:
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1919-01-19
Stock to Represent
Larger Ownership Share

Thus the movements of security
prices will not be general in either di-
rection, but only special to particular
securities or classes of securities. The
earnings OF the war-bride enterprises
will fall. But the stocks need not
sharply fall since contingent reserves
have in general been amply provided
against losses from the disappearing
war demand.
Public utility enterprises will have
to get relieved in higher rates for ser
vices, or go into receiverships.
Bonds will fail 4 any. great appre-
citation until afeor a succession Of
peace years haze brought lowering
interest rates. Meanwhile the losses
in the purchasing power of the in
vested principal Will be not less real
In the long run. common stocks
should show the effects of the sub
stantial scaling down of the bond
holders and preferred stockholders
rights of ownership. The stockholders
ownership share Will be larger On
the other hand, and a larger matter,
the earnings of the common stocks will
get narrower as wages and other costs
are catching up with prices. There
must then be scaling down Of profits
But in the long run stocks need not
greatly fall. The present market prices
arc low now through the general rec
ognltlon that the high earnings are ar
tficial and temporary.
This trend toward higher earnings
of enterprise, while prices are rising
through the lag of wages and of other
costs-and later gradual elimination
of these exceptional profit margins as
costs approach more closely to the
prices of production-W we'll illus
trated in the years from 1898 to 1912
The rise in earnings and in exchange
quotations was sharp from 1898 to
1902-'03; the peak in 1903-'O5; & slow
ing up or q fall from 1904 to 1907 a
panic in 1907.
Most stocks never reached again the
earnings or prices of 1860 but.
during the two or three years of slight
ly rising prices following the panic of
1907, these stocks recovered in part
from the earlier fall. In the large.
costs had been for six or seven years
gaining on the selling prices of goods.
despite the general trend toward the
high prices of finished goods.
The immediate prospect for advance
with most stocks is. then, not bad-the
longer time prospect not so encourage
ing. Public utility stocks. however,
will seriously suffer in earnings, and
therefore presumably in market quo
tations until charges are auth orized
that are somewhat in proportion to the
inflation- advanced costs These indus
tries nre a good illustration thnt moth
ing durable is ACCOMPLISHED by infla-
ton excepting injustice. host of
new problems, andsa long series of re
adjustments.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1919-01-19
Rising Prices Act
As Shock Absorber

The explanation lay in banking poll
cies Gold redemption abroad was sus-
pended The banks of Europe were
practically relieved from reserve re-
qulrcment. The limits on the amount
Of deposit credit that these banks could
create were removed with the suspen-
sion Of gold redemption Herewith
the banks were enabled to absorb bonds
IN unlimited qualities, paying for
them in terms of deposit credit: or
they were carrying the buyers Of bonds
al the same time with Offering financial
support to whatever undertakings. do
nestle or foreign, appeared able to
offer adequate security
true, prices rose. This was inevi-
table. Prices were the buffer, the shock
apsorber. The effects of redundant
reserves or suspended reserve renuire-
ments took themselves out in their
bearing on prices. Unless the demand
Tor accommodations is enormously in
cSreaslng-as in fact it was increasing
put TINS solely by virtue of the con-
SUMPTION and the destruction of war
rather than because of new factories
ana new equipment and new raw ma
teTlals-the rate of interest might have
fallen even more sharply through the
pressure of the banks to expand their
loans
= These high prices in England and
france gold still being available and
IN use Tor foreign balances set goods
TO LOVING III from America and gold
10 flowing out to America. But still
interest rates were low in London and
Paris, because, under suspended re-
sumption, gold holdings were not
greatly needed; and they would buv
foreign goods. OF course there came
an end to the supply of gold to be re
leased Tor export. But meanwhile
America had imported nearly a billion
dollars of gold from Europe. It's bank
reserves We're thus made plethoric-its
possibilities of credit EXPANSION rem
dered enormous, beyond any menace of
suspended redemption or of hazard TO
the gold standard. Gold merely got
chcapef-lost IN purchasing power.
capita was plenty, borrowing remain
ing easy, interest moderate, deposits
expanding, prices kiting. The banks
could absorb bonds al low charges or
could carry buying customers on easv
terms. 1T was in truth~and still is
easy enough for the banks to keep in
terest rates low, but only on terms Of
pushing prices higher
so again now. they can if thew will
force prices down by making interest
high imposing rates that will induce
or compel the liQuidating Of banking
paper and the cancellation Of deposit
credits in this process Of making pnv-
mcnts. Dcllation in this banking
aspect, and in its general aspects. is
the precise reversal Of initiation. Bank
initiation makes deposits larger bv the
grant Of larger loans-the larger de-
post credits being the proceeds of the
increase in discounted paper. Della
ton is reduction Of deposits made nee
cssary by the calling in of papcr-dc
post credit cancelled in the paying off
OF borrowers liabilities. But it takes
hgh interest TO make people want to
pay their notes. az it took lower in
tcrcst to induce them greatly to cx.
tend their borrowings.
But the expanding credit currency
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1919-01-19
Atsenpt 10 Retain
lnduslrv Consciousness

IN so Tar as industry can suggest
to this service plans for conservation
n Industry itself which will benefit the
industry in question without detrimcnt
70 the public interest these plans win
De indorsed by the service. 1T sbonld
be clearly understood, however. that
the service is promotive purely; in no
sense is it restrictive, and in no sense
is it police body"
The Industrial Cooperation Service
IN Its inception represents an attomnt
10 retain industry consciousness. which
proved great stimulus to efficient nro-
ductlon during the war. In league with
the United States Chamber of Com
merce, it is encouraging industries n
form completely representative com
mlttees to handle matters of common
interest,"
Cooperation in industry. even gov
eminent officials are now whisnor;n,,
may not be entirely consonant with
the spirit Of the Sherman antitrust
law and its amplifcations in the Clav-
ton acts, but the awareness is proyin,,
mat perhaps those acts are not the
last word in economic legislation. In
c'denta!ly' because Of its intimate re
iat'ons with both industry and govern
ment the Industrial Cooperation Cor
wee expects eventually to be able to
make constructive recommendations 10
congress regarding necessary lceisla-
ton
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1919-01-19
Business Gets Free
Hand in REIMBURSEMENT

From the standpoint of free initiative
IN business, two dangers loomed up
when the armistice was signed. The
first was that q bureaucracy built on
the foundation stones of taboos might
fail to unshackle industry after the
emergency ended. The secondhand
quite the other eXtreme-was that lack
OF vision might compel government and
industry to return entirely to the old
ways and reject the benefits that came
from working together. Before leav-
ing for Europe, President Wilson. in
an address before Congress. relieved
business of the fear that it might not
he set free again. Members of the
Cabinet, following the lead of the Chief
Executive, then began to inform the
country in a phrase here and sens
tence there that the genius of the
American business man would be re-
lied upon to pilot the country through
the shoals incident to the readjust-
ment of industry to peace basis, and
that the government as a serviceable
friend would stimulate, promote, and
actively assist in the development of
new economic processes.
1t soon became apparent. despite the
chaos that exists in after the-war
Washington, than the main contact be
tween government and industry would
be the Department of Commerce, which
had been overshadowed during the war
by such emergency bodies as the War
Industries Board and the War Trade
Board On the Expressive side other
agencies Of government may be ex-
pectcd to continue to function, but to
Secretary Redield's department chiefly
the job of becoming Big Brother to
business is delegated.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1919-01-19
New Tax May Seize Part of
Profits Never Realized
Probability OF Drop in Value of inventories as the
Result of Wars End Makes Requirement to
Report Gross Income Unfair, Expert Asserts

property had sold it in 1918 at scrs,
value, the loss could have been takan
as actually ascertained i 1918 and b;s
porfts subject to tax for that wear
would spondingly have been re
duced. In this case the excessive
amount invested in the business wo,,s
be properly reflected as an expense -
production during the war period L
this manufacturer was not engaged IN
war business and if the property was
not actually sold in 1918. it is cles-
that he cannot obtain relief under ~.
provision for amortization. Il is a,so
clear that if he is limited to dcprec;a.
ton based on the physical wear ana
tear of the property, adequate deduc.
ton cannot be made.
If he is to be relieved at all, it mus,
be through the broad Interpretation a
the word depreciation" to include loss
due to obsolescence as we'll as loss due
to use, wear and tear Of the property
based on the physical life Of the
property. Unquestionably, the tax
payer in this case has sustained .
heavy loss incident to his business in
1913, and one for which he should re
ceive proper allowance in computing
his income subject to tax for that
year. The substitution Of the word
depreciation" for the term use, wear
and tear in the 1916 law, would seem
20 permit an allowance for obsolescencc
Of the property IN 1918, which vii
give the necessary relief from cxces
sive taxation in this case
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1919-01-19
More Dollars, but
Poorer Dollars

Our entry into the war did not pro-
toundly affect this aspect of the situa-
ton. Interest rose somewhat. The
securities boom slackoned. but mainly
through the menace Of higher profit
taxes and through a general uncer-
talnty as to the duration of the high
profits period. Securities are still
easily to be had at par that report cur
rent earnings Of three or four times
the current rates Of interest.
These facts would afford the kew to
the future movements OF interest and
OF stock exchange quotations, if only
the outlook were clear as to the move
ment Of general prices. And the move
ment OF general prices could be fore
told, If the future policies of banking.
and credit were clear The American
situation, taken separately, would seem
to promise initiation. The European
prospect appears. not very securely, to
be IN the other direction. On the whole
1t seems probable that we shall pro-
coed with cur initiation until foreign
influences block our further way.
If. however, prices remain stable
if, that is to say, imitation is halted,
the government Financing its domestic
and foreign needs neither by the bank
borrowing that multiplies currency nor
by the ultimate borrowing that pushes
up interest rates, but solely by taxes
interest rates should not greatly
change from the present level
The present degree of initiation Will
shortly have taken out It's effect on
prices and. somewhat more laggingly,
on wages. Interest may harden a little
as the currency loses its margin Of
redundancy. On the other hand, the
longer time trend OF interest is likely
to be slightly downward, toward the
rates that, in the long run, larger
savings relatively to industrial de-
mands will tend 70 fix
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1919-01-19
To Widen Usefulness
In Fertile Field

on larger scale than ever before.
with appropriations twice as big as in
any previous year, the Commerce De-
partmcnt is setting about, according to
iis chief, to place government at the
disposal of legitimate industry. It
has no aspirations to aid by Offering
patent medicine remedies for the ills
Of production, nor does it aim to sue-
gest easy formulas for capturing the
trade of the world. It's main purpose
IS to give industrial and commercial
men more precise information about
things related to their own occunations
than was ever before available. The
department expects vastly to widen its
service Of gathering and disseminat-
ing economic facts through the Bureau
OF Foreign and Domestic Commerce.
u hopes to ascertain more completely
the nature of the science Of industry
through the Bureau Of Standards.
which has been called upon to facili-
tate the movement of wedding science
10 industry in the United States.
But the programme Of the depart
ment does contemplate making il =
hing apart from business -austere.
academic and theoretic A new bureau.
known as the Industrial Cooperation
Service, has just been established to
break down any barriers that might
arise.
In describing inc functions OF the
new bureau John Cutter, its acting chief
said; "The Industrial Cooperation Ser
vice, az its name indicates, is here to
serve industry in any capacity in which
u can serve, be it Standardization Of
product or functiouing in some manner
an selling agency for the other bu-
reaue Of the department. Our success
depends entirely upon our ability to
convince industry that we are here to
help and in 10 way TO hinder; to pro
mote, not to restrict.
ne great value Of this service LEG
N the fact that ne are able TO carry
over 70 the Department Of Commerce
the intangible contact between govern
fnent and industry, which vas the
Foundation u the War Industries
Boards unchallenged succcss."
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1919-01-19
Values Depend on Earning
Power and Interest

It is then not quite true that values
depend on earning powers, but they de-
pend on earning powers as one variable
and on interest as the other. When
one can buy security that promises
per cent on the cost and can borrow
time funds at or per cent, or call
money at or . per cent, it is safe to
look for advances in security prices:
Values are merely the capitalized pres
emit worth Of forecastcd returns. Origi-
nal costs do not matter except in so
far as they may promise new competi-
lions and lower earnings. Good will
and monopoly are dividend markers,
and therefore support present market
values. And business men regard
either as capital.
Most economists incline, however, to
regard capital as primarily or eXciu-
aiyelY made up Of industrial items like
tools, appliances, machines, power
plants, raw materials, and explain in
terest as due TO the earning power of
these specific kinds Of capital. Capital
has It's origin, the economist says, in
savings But to the business man, for
most Of his purposes, capital means
merely funds These funds he calls
money. fhis is what he borrows and
pays interest on. And commonly he
borrows the capital from Il bank. To
the typical economist Of the estab-
lishcd tradition high interest points
TO scant supply Of the means of pro-
duction. or to AN especially large de-
mand for the production forms of
wealth. But to the business man high
interest means merely the scarcity Of
banking accommodations. Almost ex-
ciusiycly he borrows or lends what he
calls cash--the circulating medium
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1919-01-19

currency can be issued for every dollar
of increase in gold reserves.
Interest rates, therefore, arc mainly
and directly dependent on banking con
dltlons and banking policies. Easy
money is really easy banking credit.
Easy banking credit depends, in turn,
on easy reserve conditions and require
ments. For all business purposes cap
ital is plenty when borrowing is easy.
Borrowing is easy when bank reserves
are easy Capital, as made up eXclu-
sively of items of machine wealth,
available in the industrial processes of
concrete production, the business man
practically never borrows. He may or
may not employ the borrowed funds in
buying or making new equipments
Equally we'll he may be going in for
wide advertising, or putting more sales
men on the road, or purchasing fran
ton of securities. He needs operating
funds These are capital for him
Equipment goods are capital, but they
are not the capital handled in the fnan-
cial markets under the ordinary inter
est contract.
1t was through this ambiguous mean
ing of the term capital, and in oblivi-
BUSINESS of the main sources of the cur
rent supply of business capital, and in
the lack of understanding OF the forces
fixing banking charges for banking
loans that the economists and the bust
ness world were mislcd into the eX-
pectation that the great war would
bring a prompt and rapid rise in rates
Of interest
In fact, however, interest rates ruled
extraordinarily low for the following
two years and have been at no time ex-
ceptonally high. Wealth was being de
stroyed. Current supplies Of products
were being rapidly used up by war
The belligerent nations were borrow
ing beyond anything hitherto dreamed
Of as possible in their stress for fur
Their funds. But interest rates, as the
February, 1916, Bulletin of the National
City Bank reported them, were still
dragging on the ground Call money
at "a to per cent Besc names
on commercial paper at per cent"
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1919-01-19
Would Standardize Money
Reduction in Variety of L. S.
Bills Is Urged

WASHINGTON, Jan. l8-Gradual
reduction of the great variety Of de-
signs of United States currency to min
imize the danger of counterfeiting and
bill raising is under discussion be
tween Treasury officials ard members
Of Congress. The United States now
has ffty-four different designs for bills
Of various denominations. and officials
believe the resulting unfamiliarity of
the public with the designs enables
counterfeiters to operate moro easily
than if the designs were standardized.
There are now in circulation five
different kinds of 81 notes, five kinds
of So bills, six SIS, seven S10's, seven
S20s, six S50's, six sio0s. four s5oo's,
five S1,o0o's, one $1,000 and two
$10,000's.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1919-01-19
" aiiin@ in the Wool yrode

BOSTON, Jan. 49, In st-.amcnt
for The Tribune, the editor Of "Thc
American Wool and Cotton Reporters
said:
Many manufacturers of woollen
goods haze been delaying tine cxccn-
ton OF their programme for fan busi-
ness on account Of lack Of confidence
IN the prices paid ut the auction Of
goVernment-owncd wool. They have
been hoping for lower prices and un-
less they see them will continue 70
%nlt. some, however, between the
dcYN "nd the deep sea, or between pay
lnE the prices asked and extrcmc cur
tailmcnt in production, or possiblv
stopping operation OF all thor NM
chlncry, viii prefer to pay the price
and take a chance The feeling is gen
cfai that the minimum bid poliog rs en-
tirely inadyisabic. Real maraot vnhl.s
~ill be established only hN aollmQ The
wool at whatever price it Win BRING
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1919-01-19
No Compulsion in
New Service

The government is recognizing the
fundamental Importance to the nation
OF production and commerce. And at
The expense of all the people it is pre-
parlng on more comprehensive scale
than ever before to promote business,
only asking in return that trade be de
vcloped for social purposes.
so lar as the industrial conservation
programme, which is the most stressed
of the specific functions of the new
bureau, is concerned, its adoption bv
industries is to be entirely voluntary.
out is to be done under the encourage
ment and with the specific approval of
the government. In recently announc-
ing the launching of the new service
Secretary Redheld said: "The func-
tons which have hitherto been exer-
cised by the conservation division of
the War Industries Board viii be con-
tinued by the Department of Com
merce, which has established for that
purpose the Industrial COOPERATION
Service. The work of the new service
Will be voluntary so far as the indus
tries are concerned, without any Gle
ment OF compulsion, depending on con-
sent to methods approved by common
council and trade experience.
Mr. Cutter revealed the plan of the
new service for working out the con-
servation principle.
''Ihe functions referred to in the
Secretarys announcement" he said
are the conservation of labor, ma
terlal and capital through studies of
individual industries themselves. Tho
War Industries Board was war-mak
ing institution The conservation d.
vision as part Of that organization had
for its duty the saving of material SO
that material could be used to DESTROY
German armies; the saving of labo~
so that the labor released could serve
in the military forces or in the actual
industries making munitions Of war.
the saving of capital so that the money
so released could be directly or ind
rectly devoted to the prosecution of the
var
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1919-01-19
Government in Big Brother
Role to Help Guide Industry
Department of Commerce. Through, Newly Oroan.
lied Service, Aims to Perpetuate the Spirit of
Cooperation Engendered by the War

to make his pilgrimage to the capital.
Besides forging the new bureau into
an instrument for getting men in in
dustry to work together and with the
government, Mr.. Cutter will carry over
some of the War Industries Boards
programme for conserving labor and
materials by the elimination Of unnec-
essary styles But whereas the War
Board took the initiative in bringing
It's IDEAS to industry, conditions are
now reversed, and the Industrial Co
operation Service will act only when
called upon by the industries them
selves
In Mr. Cutters words: "Practicallv.
The war is over; theoretically, Of
course, a state Of war still exists, but
the fact is clearly recognized that the
necessity for conservation of war pur-
poses is ended. In other words the
time has come absolutely to reverse
the policy which was the basis of the
general functions of the War Indus
tries Board, that of modelling indus
try to aid the government"
Now government bureaus are mob
ilizing to aid industry
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1919-01-19
Losses of
individuals

The Senate bill provides that mel
losses sustained during taxable year
beginning after December 81, 1910
and ending not later than December 81
1913, by the taxpayer in his business
or from the sale Of buildings or fac'i'-
ties. acquired subsequently 20 April %.
1917. and used in the production G.
articles contributory to the prosecu
tion of the war. may be deducted from
the net income in the succeeding year
A similar net loss occurring in tax.
able year ending January 1, 1919 81 a.
be deducted from the income Of she
preceding taxable year f sufficient anu
if not the balance may be deducted J"
a succeeding taxable year The equiv
Of this change is clearly apparent
An important change IN ITO NC"
bill permits the deduction of losses
in transactions in stocks and secu"
ties, or other property not connec'e"
with the taxpayers business, REGARD
less of profits derived from S'nl'i"'
transactions. Formerly losses OF fs's
character were limited TO the extent Oh
any profits from dealings in properly
not connected with the taxpayers pus'
ness. As under the former law 'os
basis for determining loss in Suea
cases is tre ccs' of Size property or'
acquired puor to March !, ials, 'p'
market value as OF that date.