Evening star., 1920-03-14
BUSINESS VIEWS OPTIMISTIC.
DUE TO TWO COURT DECISIONS
Relieving Stock Dividends From Income
Tax and Ruling on Railway Interests
Have Marked Effect on Securities.

Have Marked Et
Two decisions Of the United States
Supreme Court during the week had
marked effect upon securities and
upon sentiment generally in produc-
ing more optimistic view of the out
look.
These two rulings of the court were
the verdict declaring that stock divi-
dends are not taxable as income and
the decision requiring the Interstate
commerce Commission to accept the
present value. and not-as the COM
mission held-oriSinal cost or amount
invested. as a basis for the physica,
valuation of rights of way and ter
minals.
Comment by Bach's Review.
In commenting on these two de-
CiSiOnS the Bache Review says:
Both of these decisions arIear to
the lay mind to be matters of only
the most obvious justice, and now
that the decisions are ma .e it seems
remarkable that any other contention
could have been entertained for
moment by the officials of the internal
revenue bureau on the one hand and
by the members of the Interstate
Commerce Commission on the other.
of the two decisions. much more
ltipoI tdHl III clctst IL thc
ono regarding railroad valuations.
This, under the recent railroad bill.
puts "A new and added value upon
railroad securities, because now the
''p per cent rate which the commlS-
sion has been directed to put in force
VIII be Calcuiated. in most cases. upon
a largely Increased valuation.
1t is impossible to understand why
the Interstate Commerce Commiss sion,
except from prejudice. should have
desired so unfair a method of arrlV-
ing at values as to disregard the ac-
crued increment which has Injured to
railroad properties Gas we'll as to
nearly all other stable belongings)
through years of national growth, and
latterly through the rise in values
brought about by the economies of
war.
IF the commission had had at
heart and for it's main purpose in the
last ten or fifteen years to slowly but
undeviatingly break down the trans
portation system of the country. de-
stroy it's credit and relegate it to the
scrap heap of bankruptcy. at the same
time assuming a benevolent front. it
could hardly have pursued more
successful method of accomplishing
these purposes than it has unswerv-
ingly followed
Railroad. at Real Value.
Take this very matter of the valu-
alton of railroads. The commission
has invariably acted in manner
most hostile to the wellbeing of the
roads and of the investors in their
securities. The purpose evidently has
been to prove that the roads were in
fated. and thus to justify the parsi-
moniouS and unfair treatment of them
in the matter of rate allowances.
Wherever valuations appeared to JUS
ufy higher rates the commission has
n yy q n nf nCf =
ter how much value had been added
through years of operation and up
building, but wherever replacement
costs happened to exceed present val
uations the commission has stood out
for the lower figure.
In other words, every move of the
commission has been in the direction
of cutting down railroad earnings,
and up to the time of the passage of
the Esch-Cummins bill it had sue
ceeded in bankrupting railroad credit.
1t is about time that the commission
gave up its hopeless fight to justify
its narrow and destructive action for
years.
Congress, by the passage of the
railroad law, has recorded the will of
the people, that the railroads shall be
placed upon prosperous footing. The
thinking part of the public will watch
the commission to see that it reforms
and falls into line. .s@
The ruling this week as to vaIua-
tion should allow the roads to con-
tinue dividends and to build up sur
pluses just as every other successful
business does.
Every one who sets himself up as
the enemy of railroad prosperity
brands himself as an enemy of the
country, because upon railroad pros
whole country.
n>~~vA>A n-n.-.
1T seems to be necessary to go
through long, tedious and expensive
processes in order to get decisions
from the Supreme Court on questions
of which the exercise of sane. COM
mon sense on the part of officials hav-
ing the power to decide would have
quickly determined the correct solu-
tion-
The taxation of stock dividends
had not a leg to stand upon, and the
ruling of the internal revenue de-
partment should have promptly set
tied the question. Public officials are
SO ruled in this country by political
considerations that the whole char
acter of their judgment is warped and
twisted. and only Supreme Court de-
oiSions seem able to clear the atmos-
phere. Artemus Ward used to say
that he was surprised to find how
many things he knew were not so.
On this basis it might be concluded
that the prevalent attitude of many
Washington officials would be one of
amazement."
Dun's Estimate Of Situation.
Speaking Of the change for the bet
ter that has come over the general
business situation. Dun's Review says:
With characteristic abruptness.
financial sentiment has undergone re-
versal, becoming more cheerful on the
further improvement in foreign ex-
change and other constructive develop
ments. and moderated weather con-
6itions have had a favorable influence
in commercial channels. Recovery Of
production and distribution Of goods
from the disorganizing effects Of re-
peated storms OF unusual severity is
in progress. though serious transpor-
tatton handicaps remain in some sec
tfons. and encouragement is derived
from the accommodating indica tfons that
the high point of some commodity
prices has at least been witnessed
tenths OF one per cent in Dun's Index
number as OF March / seems trivial in
comparison with the precs ding extraor-
dtnary upfurn. yet It 10 significa Mt
as rejecting ch&n.s in the main
price movement AID may conceivably
be the forerrnne- - gradual. II ir-
regular. downward -djustnent. Spe-
cihcally. some fooGCsl.Fs. hides and
leather. some tex .es ari pig iron,
among leading ar-.c:ef, lave reacted
more or less froni 80 .,s-ret top levels,
and not few buyer c.tha,i "a momen-
tarily disrssardinS th: c:an!ent of cost
IF their needs he as;Les = !iy urgent. arc
largely limiting commitments to actual
and weil-dsfnsd rsau!r..asnts, on tho
theory that such Il policy Will prove to
he advantageous. supporting the be-
lief that continued pric. dsfation IL in