Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-09-04

known on that day, was on tiptoe with
excitement. Hope ran high that the
ruling would be favorable as the word
came over the ticker at 1905
"Washington--The Supreme Court
is now in session"
The stage was set for the news.
The Street. expectant. literally hung
over the ticker. Then, at 1910, to
the CONSERVATION of the Street, the
ticker sputtered and spoke again:
"Washington-The Supreme Court
has ruled that stock dividends are
income and therefore taxable"
The effect of this stunning and un-
expected announcement was to
knock the bottom out of the market
Within a half hour 900 shares Of
stock had been thrown overheard by
panicky stockholders and prices were
crumbling right and left. But barely
had the selling wave gained full mo-
mentum when, at 12:45, a third Wash.
ington dispatch made its appearance,
reading:
"Washington-The Supreme Court
has sustained the lower court in the
finding that stock dividends are not
income and therefore not taxable"
By the time this fash was received
word had begun to percolate into the
Street that there had been an error in
interpreting the news and all that was
needed was this reinsurance to dispel
all doubt. The market started up.
ward even more vigorously than 1t had
gone down. and. aided by favorable
technical situation. staged a startling
advance. Some issues-those of COM
panies with big SURPRISES that might
be expected to be distributed as a re.
suit Of the ruling-spurteda as much as
or tyafc hnf
at 3 o'clock.
Needless to say, the reporters
blunder proved costly one for many
spectators who sold on the first flash
OF the ticker. For a time there were
threats of legal action against the
news bureau. but these subsidized when
it came to be generally realized that
there was nothing premeditated in it.
The reporter responsible for this
celebrated ''bull' was one of the ablest
and most accurate men in the Wash
ington service, and his error can only
be explained perhaps, as his own pa
per later expressed it, as lone of those
mental alterations which nobody on
earth can understand"
SEATED at the reporters table, his
ear strained to catch the drone of
Justice Pitney's voice as the latter
read the decision. he at first was in
clined to interpret the latter as con-
shutting reversal of the lower courts
AN "unfavorable" ruling. Before
him was prepared statement, ready
TO dispatch by messenger to a teleg.
iapher in another part of the building.
1T read: The Supreme Court has
haf CT Ie
come and therefore not taxable" On
the strength of his first impressions
or the decision he crossed out the two
'nots," but decided to hold back the
Hash until he was more certain that
he was right
AS Justice Pitney proceeded further
In his reading it became more and
more apparent to him that the decision
was not unfavorable, but favorable.
Having satisfied himself completely
that his second Interpretation was the
correct one, the reporter released his
messenger. completely forgetting that
he had previously blocked out the two
all-important words on the printed
form and had not written them in
again. He sat in the courtroom for
another half hour after that, blissful
i'm the knowledge that he had been the
first to get his report on the wire 1t
was not until his office, convinced by
flood Of inquiries from brokerage
houses with private lines to Wash
ington that there was something
wrong, queried him for check" that
he realized his error.
To add to the confusion in the
Street that day, the rival financial
news ticker, not having heard from
its own correspondent, picked up"
axaI t,rir cd he q
the decision. thus multiplying to a large
degree the numerous private assur.
ances that came pouring in from
other directions throughout that half
hour of pandemonium.
X X
A LIGHTER episode involving news,
human fallibility and the stock
market was the so-called General Mo-
tors tip" of August, last year. Here
was an incident embracing these three