Evening Republican, Volume 21, Number 238, Rensselaer, Jasper County, 23 October 1917 — NEW LIBERTY LOAN 4 PER CENT BONDS ATTRACTIVE TO LARGE INVESTORS. [ARTICLE]

NEW LIBERTY LOAN 4 PER CENT BONDS ATTRACTIVE TO LARGE INVESTORS.

f The erroneous impression has been created that the new Liberty loan 4 per cent bonds are not attractive to persons with any considerable income. It should be understood that there are two taxes, the regular normal income tax, such as was paid last year, and the additional tax, which is to be levied during the period of the war. For the following computation the most unfavorable basis is used, that is, it is supposed that the war will last five years, and fu r t hermore, that the government will retire the bonds at the end of the ten-year option. If the war ends before five years, the return Is greatly improved, and if the government allows the bonds to run after the optional period, which will undoubtedly be the case, the yield will also be improved. The method of computation is as follows: On an income of SIOO,OOO the present tax is 3.02 per cent The total tax, Including the special war tax, will be 16.43 per cent. Thus for five years the bonds would net the Investor having SIOO,OOO income, 3.34 per cent For the five years following the bonds would net 3.84 per cent, the war Income tax being removed, making a total income for the period of 8.59 annually. So it will be seen that even with a SIOO,OOO Income a 4 per cent bond is a better purchase than a 8% per cent bond. On incomes of a lower amount the Income rate Is higher, as pen the following table: On an income of SBO,OOO, the, income for the ten-year period is 3.65 per cent annually. On an income of $60,000, the Income for the ten-year period is 8.71 per cent annually. On an Income of $40,000, the Income for the ten-year period is 3.76 per cent annually. , On an Income of $20,000, the income for the ten-year period is 8.83 per cent annually. On an income of $15,000, the Income for the ten-year period is 8.87 per cent annually. ' On an Income of $12,500, the income for the ten-year period is 8.89 per cent annually. ——— On an Income of SIO,OOO, the Income for the ten-year period Is 8.08 per cent annually. On an income of $7,500, the Income for the ten-year period is 8.98 per cent annually. On an Income of $5,000. the income for the ten-year perior is 4 per cent annually. Furthermore, these bonds, being exchangeable into the next loan, that loan must, like the other loans, be sold at par, so that this bond must continue to be worth par. For the above reasons it seems wise for the holders of 8% per cent bonds, instead of exchanging their bonds for the new 4 per cent bonds, that they otter their bonds for sale at par and buy 4 pen cent bonds with the proceeds, thus largely increasing the subscriptions of the present loan.