The Wilmington morning star., 1944-10-20
BY ROGER ". BABSON

BY ROGER ". BABSON
BABsON PARK, Mass, Oct. 20.
Many businessmen and investors
are becoming frightened at h e
thought Of the huge pensions, ETC.,
with which the nation will be bur-
dened after the war. In fact, Har-
ry L. Hopkins, the Presidents
closest advisor, in the current is
sue of American Magazine calls
also for more benefits and bonuses.
Instead of suggesting a general tax
reduction, he demands lifting all
taxes from those in the low r
brackets and increasing minimum
wages to so cents an hour. Ger
tainly, this will not encourage bust
nessmen to enter new ventures and
employ more people.
When the price controls and the
excess profits taxes are removed,
most businessmen can pass on a
good portion of their taxes. This,
however, cannot be done by those
who have retired from active bust
ness except through a most care
full selection of investments. What
are the investments by which in
vestors can compensate for these
Federal expenditures for pensions,
Social Security, relief, etc? be-
lieve that one answer lies with
putting ones money into good mer-
chandizing stocks.
You see that people who are to
get veterans or old-age pensions
and, in fact, Social Security will
not save the money; but will i'm
rnediately spend it at the food, va
riety and chain stores in the neigh
borhood. Hence, one way for in.
vestors to protect themselves is to
own stocks in these stores. Instead
Of. fighting pension, benefit. Hop
kim minimum wages or Hillman's
labor union rates, 1t may be safer
in the end to let the politicians
give this money to the people and
then collect it back again through
the stores at which they trade.
But there are ether reasons for
buying good chain store stocks be-
sides those above given. Consider
the following:
/. Very few Of these merchandise
ing chains have bonds outstanding
and a number have no preferred
stock. I Like best common stocks
which are not preceded by either
bonds or preferreds.
2. Many Of the chain store stocks
are selling for not more than heir
book values. If we are headed for
further New Deal interference with
business, book values are an i'm
portant factor to consider.
3. Most of the chains rent their
stores and, hence, are not tied
down, like manufacturing COM
pany or a large department store,
to one spot. They can move when.
as and if desirable.
4. These chains have a fairly
low labor cost; but any wage in
creases will apply also to COMPETE
tors. Hence. the labor expense is
not an important factor.
S. Agosd merchandiser can liq-
uidate quickly if necessary. Some
Of these merchandising companies
might well be compared with a
good bank or fire insurance COM
pany-as far as their assets are
concerned.
6. II some state enacts taxes
which are too severe, a chain can
quickly move out of that state as
leases become cancelable. I know
OF certain cases where they have
started to move and the legisla-
ture has repealed the taxes.
Z. Merchandisers pass along Fed
era1 taxes by adding them to the
price Of goods. If there is not a
Profit in carrying certain merchant
disc, the stores will not carry such
merchandise. In fact, believe that
most taxes are ultimately paid by
those manufacturers or W a 6 e
workers who are tied down to one
locality, not by the storekeepers.
3. Various new inventions, pro-
cessess and products are coming
on the market after World War II.
This viii be beneficial to many in
dustrial concerns, but will be harm
tul to many others. This is a prob
lem, however. which the merchant
need not consider. He is in a DO.
sition TO- sell whatever the public
wants. whether old or new, and by
whomever it is manufactured.
3. The merchandising stocks
yield well and most Of them are
listed. The chains cover large
areas and m ny states. Hence.