Coulee City dispatch. [volume] (Coulee City, Wash.) 19??-19??, 1938-01-13

lowance for any money ''unwisely"
invested by utility corporation or
any money spent for bribery or any
other dishonest" purpose, and not
being willing to allow even in
creases in land values, if they were
"unearned increment" or if the
value had advanced through no eff
fort of the company, these conserva-
tives do not look for any rush of I'M
employed capital to the utilities. Or
to any other business on which the
heavy hand of the government
might fall.
How They Reason
Hence, these conservatives rea-
son, the only way that money can
be employed, and thus provide jobs
for the unemployed, is to permit
going concerns to use some of the
SURPRISES for expansions without a
punitive tax.
This does not mean, these con-
servatives point out, that this par
ticular money would escape taxa
ton. On the contrary, it is sure to
be taxed at least twice by the fed
eral government.
Thus if the Niagara and Hudson
company, to use a specific case,
though an imaginary one, should
earn ten million dollars above it's
prudent dividend requirements, and
should desire to put this money in
to new hydroelectric plant, it
would be permitted to do so without
paying an undistributed earnings
tax on that ten millions. But it
would pay at least is per cent in
regular corporation earnings taxes.
This figure of 16 per cent is the
lowest any one in congress is think
ing about. 1t contrasts with the
present normal corporation income
tax of IS per cent. Probably, when
the law is enacted, it will be nearer
20 per cent and some want it even
higher.
Presumably this ten millions
would eventually be distributed as
dividends. When that happened the
stockholders would, of course, have
to pay their individual income taxes
on it. And meantime, any addition
al earnings occasioned by this in
vestment would, of course, be sub
ject to the 16 per cent or larger reg
ular corporation earnings tax.
An Old Story
There is a story dating back to
1888, right after Franklin D. Roose-
welt became President, that some
bankers in New York, who hap
pened to be the trustee for his faith
er's estate, wrote him a carefully
worded but perhaps indiscreet in
quiry as to what it would be safe
to put his money in, in view of what
the government might do.
According to the story, Roosevelt
laconically answered.: ''You are the
trustees"
Also, according to the story, the
bankers wired back: "We have put
the money in government bonds.
Now you are the trustee"
That story is apropos now because
of the recent statement tosthe press
by President Roosevelt of his ideas
on what return should be permitted
on capital invested ny private per-
sons. He was speaking particular
ly of the utilities, and he was dis
cussing the so-called "prudent in
vestment" theory.
If you put that statement together
with the very well-known ideas of
Nv Poncnx,n14 i,,fn
there results situation which to
any prudent investor, would
seem to indicate that the sensible
thing to do would be to put ones
money in government bonds. Es-
pecially if one had an income large
enough to put it up in the high
surtax brackets. And that, of
course, is where a lot of the money,
if not most of it, for all sorts of
new ventures and expansions comes
from.
The point is that Mr.. Roosevelt's
pattern for private investment con-
tains no calculation for losses. If
an investor puts money into five en-
terprises, and one of them is a flop,
ISSultlllS LII d COlllpltIS lOSS, Illcle
is no way, under the Roosevelt for
mula, for one of the others to be
bonanza, thus enabling the inves-
tor to come out even. He is just
out of luck.
Roosevelt's Ideas
Let's look at Roosevelt's own
ideas of prudent investment" as
expressed to the press. And one
must bear in mind that it is Roose-
velt's ideas about the famous Bran
deis decision, not what the justice
really said, that is important.
If any of the money was invested
foolishly, that does not count. That
is just loss. If any of the money
was spent crookedly, that does not
count. The President did not men,
ton promotion, but he does not like
promotion, so that does not count.
If the company bought some land,
which increased in value through no
merit on the part of the company,
that does not count.
So it's only the money actually