Show 1 L S N NH i H un uni bD f around t tN the I N NATIONAL APITA API TAL Carter Field Very Ver Washington Very interesting ini In i connection with all aU the talk from the White House that only fear Is li restraining investors from going in into into to new enterprises and particular ly in connection with with the administration administration adminis adminis- charge chargo that the electric Industry Industry Industry In In- has haa been withholding expenditures expenditures ex ex- for expansions etc at atthe atthe 7 the rate of a billion dollars doUan a year for the last Jast three years are some recent actions action by the federal power power power pow pow- er commission Act 1 I was waa the application of the Carolina Aluminum company for permission to construct a hydroelectric hydroelectric hydro hydro- electric project on the river near Tuckertown N N. C. C This Thi was denied on the ground that the Yadkin Yadkin kin river was a navigable stream tream and hence a license must be ob oh- ta tamed Ined But Dut the contention that the Yadkin river was navigable seemed absurd not only onty to the Aluminum company but to the state tate om officials cia Is of North Carolina In view of the fact that there were werl already three dams 1 below the proposed site on on the Yadkin kin river and one above it So North Carolina joined the company com com- pany in appealing I On December 17 11 the commission rejected the appeal and also in a separate action provided for an inC inquiry in In- Into the other four dams dame instating insisting in In- C stating that they be required also to obtain licenses Why all aU this stress on licenses To read the statements of the commission commission commission com com- mission one might suspect it was aU all allIn In the interest of navigation Presumably Pre Pre- the commission might tell teU the operators of the plant on some lome occasion that they could not operate operate op op- erate crate because that might reduce the depth of water down in In the navigable nav nay liable part of the tho stream Pry Presumably Pre Pre- the amount of water evaporated evaporated evaporated orated by being run through a hydroelectric plant would be sufficiently auf suf in excess of that evaporated ed if U nature took its course to affect this lids depth farther down Gets Power to Intervene 1 It seems a little fetched far but that's how the federal government f gets Its power to intervene under the Constitution The federal government government gov gov- C emment has bas jurisdiction over navigable nav nav- navigable streams The original Idea M of the founding fathers of course n concerned bridges which unless there were some lome regulation might m be built so close to the water that ships could not pass under them theme But Dut actually that Is a lot of apple applesauce applesauce sauce sauce so ao far as 81 the present contention contention conten conten- tion is concerned What the power commission wants is to force these plants to have licenses In order to lr recapture pose provisions provision Under the federal power act as 81 amended in 1833 1936 a formula is set et up for the r government taking over any licensed li- li censed sensed hydroelectric plant at the thew w end end of fifty Ally years It is to pay under the provisions of this act precisely the amount outlined by President Roosevelt in his prudent Investment theory- theory money honestly and wisely Invested no no allowance for mistakes however how ever honestly made no allowance for bribes no matter how wise wile it seemed to pay them no allowance i for promotion costs and now allowance allow ance for any increased value In the theland theland land landl With the further retroactive provision that If U it shall be discovered ered eyed when the government Is taking them over that the companies charged too much during the fifty years the amount of this excess profit t shall be deducted from the amount paid the owners by the gov t Needless to say hy if the project J was a II losing one the government does not have to take it over So its it's the old heads you lose tails taUs the government wins formula So some skeptics here think the i prudent investor will have no noi i 1 R part In anything the product Investment Investment investment in In- vestment theory governs J Trouble Ahead j Plenty of trouble impends for President Roosevelt In n the regular I session of congress This was made madet t certain in a recent press conference I in which the President stated his views view a about out what was causing the fear on the part of the Investors i The point is that Mr Roosevelt's Roosevelt I Ideas are widely at variance with chat a very large number of senators sena sena- enal 1 l' l tors tars and representatives think is t tie e reason 1 This will affect the very essence I of a number of measures which the regular session of congress must consider consider consider-aU all of them in fact tact which i have anything to do with business t Of these taxation taxa Is the most important tant The President in to his hi remarks I to the press strengthened the hands bands of those senators and representatives tives apparently Lives apparently a majority who majority who I think that the liberalizing of the I tax on undistributed earnings of I corporations corporation should go 10 a great creat deal further even than the house committee com coin has hll provided I The particular point here Is to toy I provide exemptions for tor any money t y put plant expansions As the conservative members of congress Ij tl afo see the picture the present policy of the government is a tremendous deterrent to investors contemplating ing lag putting their money In big corporations corporations corporations cor cor- in general and utilities in particular particulars Big corporations corporation because because be be- cause of the Presidents President's antipathy for bigness In business business utilities because because because be be- cause of his alleged bias blu against them and because of his frank ex as u to what wha t returns return they should be allowed to earn The point of the whole thing Is that Mr Roosevelt making no allowance al lowance for any money unwisely Invested by a utility corporation or any m money ney spent pent for bribe bribery or any other dishonest purpose and not being willing to allow even increases In Increases increases in- in creases in land values if 11 they were unearned increment or If f the value had advanced through no effort effort effort ef ef- fort of the company these conservatives conservatives conserva conserva- tives lives do not look for any rush of unemployed unemployed unemployed un un- un- un employed capital to the utilities Or Orto Orto Orto to any other business on which the heavy hand of the government might fall faIL How They Reason Realon Hence these conservatives conservative reason rea son eon the only way that money can be employed and thus provide Jobs for the unemployed is to permit going concerns concern to use some ome of the surpluses for expansions without a punitive tax This does not mean these cons con con- conservatives p point out that this particular par money would escape taxation taxa taxa- tion On the contrary it is sure to tobe tobe tobe be taxed at least twice by the federal federal fed fed- government eral Thus if the Niagara and Hudson company compan to use a specific case cue though an n imaginary one should earn ten million dollars above Its It prudent dividend requirements and should desire to put this money Into In to a new hydroelectric plant it would be permitted to do ito so 0 without paying an aDo undistributed earnings tax on that ten millions But Dut it would pa pay at least 18 19 per cent in regular corporation earnings taxes This figure of IS 19 per cent is the lowest any anyone one In can congress cress is thinkIng thinking thinking think think- ing about It contrasts with the present normal corporation Income tax of 15 per cent Probably when the law is la enacted it will be nearer 20 per cent and some tome want it even higher Pres Presumably mably this ten millions would eventually be distributed as 81 dividends When that happened the stockholders would of course have to pay their individual income taxes on m it And meantime any addition addition- additional al il earnings occasioned b by this investment investment investment in in- vestment would of course be subject sub sub- to the 16 18 per cent or larger regular rei reg ular War corporation earnings tax An n Old Story There Is Ice a story dating back to 1933 right after Franklin D D. Roosevelt Roose- Roose veil velt became President that some ome bankers jankers in New York who happened happened hap hap- to be trustee the for his tather's father fath fath- er ers er's r's rs estate estale wrote him a carefully worded but perhaps indiscreet inquiry in- in as II to what It would be sate safe to o put his money in in view of what the he government might do According to the story Roosevelt laconically answered You are the trustees Also according to the sto story the bankers jankers wired back We have put the he money in government bonds Now low you are the trustee That sto story is apropos now because of t the recent statement to the press prell by jy President Roosevelt of his Ideas on n what return should be permitted on n capital Invested by private per per- sons ions He lie was waa speaking particular particular- ly Iy y of the utilities and he was discussing dl dis cussing the called so-called prudent investment Investment investment in In- vestment theory If H you put that statement together with the very well known ideas of Mr VIr Roosevelt on Interest rates there here results a situation which to tomy any my prudent Investor would seem to indicate that the sensible thing to do would be to lo put ones one's money noney in government bonds Especially Es E. I If one had an Income large enough nough to 10 put it up In the high surtax brackets And that of ot course ourse is where a lot of the money U If t not most mot of It It for aU all sorts of new lew ventures and expansions comes ome from rom I The point is that Mr Roosevelt's Roosevelt pattern for tor private investment con conS tams aln no calculation for losses If Ifan Ifan an in investor puts money into five Ave enterprises en en- n. n and one of them is a flop op resulting in a complete loss lOll there ther ls Is s no way under the Roosevelt formula for for- mula nula for one of the others to be a bonanza thus enabling the investor tor or to come out even lIe He Is la just out ut of luck Roosevelt's Roosevelt Ideas Lets Let's look at Roosevelt's own Ideas deas of prudent Investment as 81 expressed ed to the press And one must bear in mind that It is Roosevelt's Roosevelt's Roose Roose- velt's ideas about the famous Bran Bran- leis dels decision not what the justice really eally said ald that Is Important If H any of the money monel was wao Invested foolishly that does not count That Thatis I is IJ s just a loss If It any of the money was vas spent pent crookedly that does not count The President did not menIon mention men men- Ion Uon promotion but he be does not like Jike promotion so 0 that does not count U H t the company compan bought some ome land Jand which Increased in value through no merit on the par part of the company that hat does dOel not count So its it's only the money actually put jut In and then spent pent wisely pru wisely pru dently is 11 the word word word-on on which a return re re- turn urn should be allowed Of course If f a company Invested a few million dollars lall rs and then encountered a jacking city council or legisla lure ture whatever had to be spent pent to save tave the entire investment would be ae sheer loss lOll c. c i M. M c geography of North Carolina be be- gan It gained acceleration as it progressed until Hatteras and the theother theother theother other serpentine islands blands became the easy prey of every whim of the ele etc ments meats Now the government Is attempt attempt- jig Ing to preserve the mile upon mile of lovely wreck strewn beach for fori fora I a i National Coastal park authorized by Dy congress and to anchor the banks down so that th t they will be bemore bemore bemore more habitable for the fishermen shermen who live there and the sportsmen who visit the region Rattle Battle Is II Under Way For more than 1 ISO miles mUes upon the stormy side aide of five thin islands the battle settle against the waves and wind is under way and for the first time engineers see ace a chance for victor victory Great mountains of loose sand which for years ears have drifted willy willy- nilly hilly up and down the banks blottin blotting blot blot- tin ting out forests and freshwater sanctuaries lakes lakes sanctuaries of waterfowl waterfowl- have bave been halted by plantings of beach grass or b by sand and fences which check short the momentum of windblown wind blown sand Roundups have rid the Islands of most mOlt of the wild ponies The battle has haa been carried right I Into the teeth of the Atlantic which is so to turbulent In the region of dreaded Diamond shoals For years the storms have wasted the beach and the ocean has u advanced so 10 far that several years ago the government abandoned old Hatteras lighthouse highest in the East to the waves Once it stood tood a mile from water waier but recently high bleh tides lapped the Ule bate base of the tower Engineers of the b teach beach ach erosion project carried on b by boys boy under the direction of the park set servIce service ice have found a way to make the ocean give live back the stolen stoJen land 4 d |