Evening star., 1928-12-09
Owners of U. S. Bonds
Decrease i'm Number
BY HARDEN COLFAX.

Ownership of Federal Government
securities is falling into the hands Of q
steadily decreasing number, ell evidence
indicates.
Congress may be expected to consider
legislation tending to correct this situa-
ton: probably not this Winter because
of lack Of time, possibly during the life
of the Seventy-first Congress.
In renewing his recommendation, with
greater emphasis, that Federal bonds be
made wholly tax-exempt until such time
as O constitutional amendment may be
adopted permitting taxation of all So
called tax-exempt securities, Secretary
of the Treasury Mellon. in his annual
report last week, asserted that there
Is no reason why the Treasury Depart
fnent In marketing securities should be
at q disadvantage as compared with
States and their subdivisions, or why
there should be discrimination against
individual investors who desire to ac-
quire United States Government securi-
ties" The Secretary would prefer that
all public bonds be taxable, but his
point Is that until such time as that Is
made possible the determinations should
be removed.
The fact Is that Uncle Sam cannot
market his securities on terms COM
parable to the bonds of his children
and grandchildren, for the issues OF
States. counties and municipalities are
wholly tax-exempt from Federal taxes,
and hence yield higher return to the
investor than securities Of the Federal
Government which are exempt only
from the normal tax.
The aggregate of outstanding issues
of the central government Is decreasing
that of political subdivisions Is increas-
ing at the rate of at least billion dol
lars year. On June 80, the Federal
Government had outstanding S2,992,
$4,000 in registered bonds and $9,280.-
l78,000 in coupon bonds, an aggregate
of S12,252, 1856 900 in Liberty and Treas
ury bonds, besides other issues. OF
these, $2,165 100000 were wholly tax
exempt. On the same date, States and
their subdivisions had outstanding $l5,-
210,000,000 of securities. ell tax.exempt
This sum now has been increased more
than $3.50, 900 and besides the voters
November approved bonds yet to be
issued which will run up another billion
dollars.
Individual investors unable to get
Federal Government securities with an
attractive net yield, are turning toward
the tax-exempt paper Of States and
subdivisions. Corporations, being SUBJ
ject only to normal income tax rate, are
going out after the Federal bonds. The
contraction in the number Of holders Is
rapid, allowing for the reduction In the
Federal issues outstanding.
Eight years ago It was estimated that
there were from $4,000, 900 to 10000 900
holders of United States bonds, num-
Der carried to heights during the war
This year. the estimate is that there are
from 100000 to 100000 separate
holders.
In the eight years, the value of Lib
erty and Treasury bonds outstanding
decreased SO per cent but the estimated
number Of holders decreased 6S per cent.
These private estimates appear fairly
accurate In view of official Treasury
figures, which show that In 1921 there
were $4,ll7,754,000 registered Liberty
ana Treasury bonds outstanding In the
names Of 3,385,645 accounts, while in
1928 there are S2,op2 ,607, 100 registered
bonds outstanding with 1.248,8l6 ac-
counts. There is no record, naturally,
Of holders Of coupon bonds, and there
are applications In the registered bonds
accounts but the private estimates Of
totals appear sound from the factors
applied. The official records Of regis
tered bonds show that the average ac-
count increased from Sl,216, In 1921,
to S2,396, this year. OF course, cancel
lations Of small denomination bonds by
fiduciary institutions to purchase
larger bond for convenience may prove
q deceptive element In this apparent
contraction in ownership, but obviously
not to major extent.
tCoDyrtght. .192sO