THE SMALL INVESTOR

Evening Post, Volume CXXXIV, Issue 43, 19 August 1942, Page 4

THE SMALL INVESTOR

The market price -of Government war loans, to which Mr. pqwnic*.

Stewart has drawn, altention, is a matter that must haye1 the consideration, of the Governmenl because of its effect upon future loans and upon the treatment accorded the small investor. Mr. Stewart puts the proposition: "The Government pays the! market price for all other war materials, such as steel, cement, and foodstuffs. Why should it set a different standard when it sets out to hire money?" The sound principle, applicable lo money, material, and labour, is that the war emergency should not be. allowed to raise the price, but, as between the different forms of contribution, equality of sacrifice should be maintained as far as this is possible. Equality is to be achieved in two ways: by taxation and by control. Taxation operates more heavily on the return from money than on the return B from material or labour because it is subject to the - so-called "unearned income" penalty. Control has also operated more effectively against money than against material and labour, since the price of money has actually been reduced (in spite of the much heavier demand), whereas for commodities and labour. prices have risen. '~.., Unfortunately, a clear understanding of the question has been hindered by some oft-repeated phrases that are misleading in their incompleteness. For instance, it has been said: "Others are giving service, you are only asked to lend your money." This is incorrect in two points. First,, money is not only lent; a great and increasing amount is demanded and taken by taxation. Second, while the service of the soldier overseas is given with a sacrifice that can never be adequately compensated either to himself or his dependants, other services and supplies are paid for at the market price. There is also a dangerously misleading inference to be drawn from such catch-cries: the inference that those from whom the sacrifice of life is demanded, are a different' class from those who are contributing in money- There is no such distinction. From homes of rich and poor men have gone forth. All are sharing in this greatest sacrifice of all.

The proposition Mr. Downie Stewart submits must not be confused by misleading 'phrases. It must be decided on the two considerations Mr. Stewart states: the national interest which demands a good market for future loans, and fairness to the small investor. The first consideration calls for no emphasis. The importance of the second may, however, need to be stressed in the light of past disparagement of the virtue of thrift. It is now seen,.we think, that for the present (to ■, avoid inflation and to meet monetary war needs), and for the future (to provide the. capital for post-war reconstruction), thrift is a virtue of great private merit and .public benefit. Should the citizen who practises it be subjected to greater losses ' than the careless man'who spends all?• He does not ask for more profit, but he should not be asked to meet a" Toss greater than that imposed on his unthrifty neighbour. We -would go further than Mr. Downie Stewart, however, by not excluding the big investors from consideration, for they are, in great measure, using the funds of a multitude of small savers, and the smallness of the return (less, with tax deducted, than the cost of "costless ' credit") means a loss to thousands of' depositors, policyholders, and small shareholders.