Evening star., 1933-07-30
Continued From First Page.l

are the owners of common stocks. BY
a shockingly unScientif1c system Of
finance in this country, devised by
bankers for the benefit of the stock
market, industrial common stocks repre-
sent anticipated earnings rather than
invested capital. Not for all industry,
but for a very large part, bonds and
preferred stocks represent the major
investment. Common stocks, repre-
senting in considerable measure good
will, anticipated earnings above fixed
charges, and plain water, are issued
for promoters profits, bankers rake
offs, insiders manipulations and un-
loading on the general public. It is
this system that causes such disasters
as defaults on bonds by our leading
railroads. And it makes the owners of
common stocks the chief beneficiaries
of imitation.
Imitation, once begun, has no natural
limits. Prices may reach astronomical
figures. There is every prospect that
the owners Of stocks will be able 10 pay
the enormous burden of debt in the
form Of fixed charges on bonds and pre-
ferred stock with cheap money. Conse-
quently the first effect of imitation is
an abnormal increase in the price of
common stocks. On the mere announce
ment Of imitation 5000 employees went
back to work in Wall Street.
$4,000, 10000 Owners
Who are the owners of these common
stocks, amounting to perhaps s75.o00,-
100000? Are they the poor of the
country? The question answers itself.
There has been some slight tendency
toward popular diffusion Of stock own
ership during the depression, but now,
as always, the bulk Of the stocks in this
country are owned by the rich. Half
the enormous total Of dividends from
all stocks go to the 100000 richest men
in the country. Toward the end of a
long depression great changes in stock
ownership take place, but it is chiefly
from one group of rich to another.
BY playing the market short, by pos
shrewdness. certain groups have ac-
cumlated funds and picked up stocks
ct prices little above zero Imitation is
the magic wand for this group. In
every imitation period they emerge to
power and unearned wealth. In the
Civil War period it was Jaw Gould. In
postwar Germany it was Shines In
Austria it was Viennese ex-barber. As
that ribald sheet, The Bawl Street
Journal, expresses it: Stocks are going
to come back, but not to the same
people"
What about the farmers and home
owners, those long suffering victims of
depression for whom imitation is the
sorely needed relief? Here we have a
maze Of popular misunderstanding. The
theory that the owners of land consti-
tute peculiarly pathetic group that
will be and should be relieved by in
f1ation is economic nonsense. The
classes most cruelty hurt by depression
DO not own land. The chief sufferers
are the millions OF wage and salary
earners who have been out of work for
months. It is the city people. not the
farmers who have borne the brunt
In large part those mortgage ridden
farmers who have hung on through the
depression are well-to-do farmers. A
majority of these mortgagor farmers
waxed fat off the blood and tears Of
Europe in the years from 1914 to 1921.
Some of them bought their land at
rock-bottom prices in the pre-war years
and have been paying off their mort
cages in the inflated currencies of re-
cent times. But there is no case on
record of crowd of farmers tarring
and feathering an elderly judge for up
holding mortgage payment that prof.
tied the farmer SO per cent at the eX-
pense of his creditor.
Farm Owner Turnover.
As in the case of the holders Of
stocks, there has been a vast turnover
in farm ownership during the depres-
sion. The poorer owners of farm land
have long since lost their property. The
,f So 1ar dc in
considerable degree the money-lenders,
lators who have been steadily acquir-
ing them by foreclosure and distress
sales. When it is further considered
that the very measure which provided
for imitation had as it's chief provision
a monstrous subsidy for agriculture. to
be taken in the coming months from
the bread and clothing OF the poor OF
this country despite the fact that farm
prices already have risen IN the ma
tural course of recovery almost to
prosperity levels. agriculture as an eX-
cuse for imitation becomes a vulgar
farce
Home owners are in much the same
case as farm owners. They are not
outstanding victims of depression; IN
a large percentage Of their present
makeup they are new owners without
q shadow of claim for preference, and
they have been abundantly provided Tor
by special legislation.
Who are injured by imitation? Il
the process is carried far. as it usually
is when once started, we have national
collapse, all the lurid phenomena OF a
nation eating out its own economic
foundations, as in Germany. Poland
and a dozen other countries after the
war. But who suffers when there is
material but not suicidal imitation? It
is not easy to summarize. An econom-
ist hesitates here. where a politician
settles the question by radio. There
are various groups that are special VIC
TINS.
First among these are the bond
holders These are mixed lot. Some
are very rich, chiefly because bad tax
law encourages such ownership. But
multitudes are poor. They are the
millions of patient savers who have
put their life savings in bonds, not
dreaming that they were specializing
when they paid high price for the
to redeem in gold. Also in this group
of bond-owner victims are the women
and children dependent upon trust
funds, the colleges, hospitals and en-
6owed charities and the insurance COM
penies Meme of this group realized
that the buyer must beware when deal
ing with the United States Govern
ment.
Major victims are the owners of saw
ings accounts, building and loan shares,
annuities, pensions and life insurance
policies. In some mysterious fashion
millions of the poor have managed to
preserve their slender savings. Other