How Much Is Too High?

Is it sinful for stock prices to rise for four consecutive years? Last week Emil Schram, once chairman of the Reconstruction Finance Corp., now president of the New York Stock Ex change, took a fall out of those beaters of anti-inflation drums (such as Marriner Stoddard Eccles) who want to balk rising stock prices by increasing the present 25% capital gains tax. He told the Bond Club of Philadelphia that:

P: Increasing the capital gains tax would push prices up further. Higher taxes would not abate the eagerness of those who, for inflationary or other reasons, want to buy stock, but it would definitely reduce the willingness of those who might sell.

P: The fact that stock prices are now 19% higher than the average of the last 15 years (including the lows of the '305) does not necessarily mean that they are unjustified. Industry's earnings are now 33% higher than the average during the past 14 years, dividend payments are 2% greater.

Actually there were no signs last week of a stockmarket boom. Investors were still able to find stocks in Wall Street that yield 4 to 6% in dividends. Standard Oil Co. (New Jersey) sold at $63 a share compared to a 1939 top of $53.50, although Chairman Ralph W. Gallagher told stockholders that profits for the first six months of 1945 might run higher than the $71 million ($2.60 a share) earned in the same period last year.' And General Electric Co.'s President Charles Edward Wilson has repeatedly said that G.E.'s postwar annual gross sales may hit $1 billion, more than three times its prewar average.

But on one point Schram urged the Government to step in. Since war began, thousands of well-heeled European refugees are said to have made untaxed millions by speculating in stocks and real estate. Schram urged that such refugees should be taxed, the same as U.S. citizens. Fact is, however, that refugees in the U.S. on visitors' permits are legally subject to the same taxes as citizens--if they in fact reside in the U.S. If some of them have got away without paying, the Bureau of Internal Revenue has been negligent.

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