.:v
Pa^re Two
THE PILOT
Published every Friday by
THE PILOT, Incorporated.
Aberdeen, North Carolina
NELSON C. HYDE, General Manager
BION H. BUTLER, Editor
JAMES BOYD STRUTHERS BURT
RALPH PAGE
Contributing Editors
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Address all communications to The
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ter.
MAKE TAXATION
UNIFORM
It is interesting to observe the
continual tendency on the part
of those who propose schemes
for taxation to make different
rates on different instruments.
In suggestions that came last
week one rate on one thing is
42c, on another 3c, on something
else, 15c, and so on all around the
circle. Possibly such a policy
may be logical, but to a' simple-
minded country newspaper man
the question cames up why not
put the same rate on every
thing? And that seems to be a
grave obstacle in the whole pro
ject of arriving at a taxation
basis. On every hand some one
is trying to find some way to
put taxes on some one else, and
to relieve some one who com
plains. One proponent argues
that to do so and so is to miss
helping the farmer. Another
sees a way to catch some occupa
tion that he thinks can stand to
pay more. And so we go.
Any tax measure that under
takes to put a bigger'load on
one group, or to lighten the load
on another group unless that
group is already taxed too hig'k
in proportion to its power to pay
its full share and no more, is
not a fair scheme. Every man
should bear his fair proportion
of the tax load, and nothing
more, no matter how rich or how
poor. The farmer is willing to
pay his fair share of the taxes,
and probably he is paying right
now more than his fair share.
The poor man is willing to pay
his share, and his share will nev
er be big, for when it is he will
cease to be a poor man. No man
can protest in reason against
paying his share if his propor
tion is as exactly as possible t;he
same proportion that every
other man pays. It is this con
niving to put one rate on ono
man or one business or one oc
cupation and another rate on
another that immediately mud
dies the water. Why should a
bank pay a larger per cent on its
business than a country cotton
^in, or a filling station or a shoe
j^hop or anything else? The lit
tle thing will pay only a small
sum,- and the big thing a big
pum, but all will pay alike if the
same proportion is.taxed against
all alike. What this legislature
should provide is a tax bill writ
ten in about ten lines and in
cluding every fellow and exclud
ing none, and all on the same
basis.
THK PILOT, a Paper With Character, Aberdeen, North Carol^
Friday, January 23, 1931
NO CAUSE
TO COMPLAIN
A criticising optimist, with
apparently the evidence in the
matter, protests to the editor
that in the complaint about
hard times is too much cry and
too little wool. He says sever
al of the business men of the
Sandhills note an increase over
business of a year ago, that the
postoffice has done more bus-
kiess, that the streets of the
villages show an increase of
traffic, and that if we would
turn around and look -at things
with the hopeful eye rather
than with the one with the
blinder over it we would see that
this is a pretty good winter in a
pretty good world, and in every
conceivable way far ahead of
many of the recent years. He
sihows the figures to sustain his
case, and seeing that he stands
on right solid ground notching re
mains but to pass along his ad
vice to take a reef in our com
munity back bones, saw wood
and have confidence in the days
that are ahead.
It is an old story that when
Christian saw the lion in the
way ahead of him, and was
frightened and wanted to turn
back he had the courage to go
a little further before turning
and when he got far enough up
the hill to see the real condi
tions it transpired that the lion
was chained. This optimist in
sists that if we quit our sob
stuff, stiffen up our back-bones,
go to work at the things that
are in front of us, and have the
nerve that for the last ten thous
and years has kept the old world
jogging, we will get up to th^
lion and find it like all other
lions, chained fast and not much
more to it than a scare.
When you look the situation
over you realize that the United
States to-day is the righest na
tion the world ever saw, that
prosperity has extended down
ward farther to include^ the
whole mass of people more than
ever before, and that the condi
tions are for more of the sta
ples, more of the luxuries, more
of the comforts and more of
everything than any people ever
before had, and that tears never
get anybody very far any way.
So, bUck up. Fit your actions to
the conditions. Have faith in
your ability to saw your wood,
and go to it on whatever scale
the factors make possible. Never
confess that you are dead until
you see the man-come with the
flowers.
WE HAVE EATEN
THE SEED CORN
Already the farmers are mak
ing their tobacco seed beds. Al
ready they are wondering about
financing themselves for the
summer. The banks are not in
j the same easy position to ad-
j vance funds for farm purposes,
I for the banks have much money
I only when much money is avail-
i able. Too much inclination h
I seen to blame the banks for the
scarcity of funds, but we may as
I well recognize the fact that we
1 have eaten our substance and
that before we can ride as high
as we did in the recent p^st we
must walk through— the Slough
of Despond and the Valley of
humiliation. It has been a popu
lar cry to the people to spend
their money freely that business
may be stimulated. But the cake
that is eaten is not kept. The
money was spent a year ago.
We are paying it now. It is an
1 unhappy fact that months ago
we as a people jeopardized our
■ incomes expected at the present
I to buy the commodities of the
; past. Instead of preparing our-
i selves to buy today the things
j we need and should be able to
j pay for today we bought things
i long ago that we promised to
I use today’s income to pay for,
! and w^e have no mone^ now to
spend, as the advisers suggest.
I We may philosophize all we
I want to, but we must get our
I noses to the grindstone, pleasing
i though the task may be or not,
j for the grand old organization
; of prodigal sons has been mak-
I ing recruits by the 'thousands
i for the past ten or twelve years.
I Thrift may be a vice, but it is
I a comfortable vice when the
I flour barrel is empty and the bill
^ collector knocks at the doors.
I It is all right to buy as far as
our needs and our abilities per
mit. But it is folly to think
that we can induce prosperity by
spending money that we do not
have when we can get no further
credit. Today buying that does
not include paying is not en
couraged by the sellers. And
I that is what the farmer faces,
I and with him everybody else.
I The big thing for the farmer and
nil the rest of us is to try to
make at home every pound of
food that the family and farm
stock call for, and to make
everything else as far as possi
ble that may be needed. The
landlord must encourage such a
policy, and the merchant and
very one else. On the day that
North Carplina gets to the point
i where we can use our money to
buy the things we need today,
instead of to pay for the dead
horses we have already worn
out that old ailment of empty
bellyache v/ill cease to be an epi
demic. It is a hard experience,
but present conditions would
not have scared our grandfath
ers. Instead of buying more
cakes at the stores on credit if
they could get furt^her credit
they would have raised som*e
corn and cow peas and sweet
potatoes and put their feet under
a table loaded with things they
knew they could get without
paying back debts. We have to
pattern a little by the old fel
lows who did not have as many
expenses, but who could throw
strangle-hold around hunger and
floor the adversary by aggres
sive prudence. It is not half as
hard to dig if you make up your
mind that it has to be done and
that you can do it, which is our
present situation.
Diversification and Vigilance
Fundamental Principles 6f Investment Outlin^^ m Artic e
Written For The Pilot By Economist in
Visit Here
V ^
GAMMACK & CO.
By Walter F. Jarvis
(Munds and Winslow)
The following article was written
for The Pilot by Mr. Jarvis, well
known economist, now a guest in
Pinehurst:
Too often have investors made the
unfortunate mistake of purchasing se
curities to “put away in their safe
deposit boxes and forget them.” We
are living in an unprecedented age of
social, economic <and scientific change
and, one needs but to study the his-
tory of market values of certain Eu
ropean Government bonds since *1914,
or of a goodly number of Municipnl
bonds of this country issued during
various periods of inflation, or the
bonds of any number of street railway
companies that were considered prime
investments a decade ago, or, of re
cent moment, the tremendous read
justment of security values experienc
ed during the past eighteen months to
realize the transcendent importance
of ‘^Diversification and Vigilance” in
maintaining the safety of one’s in
vestment^.
Safety is a quality of investment
that cannot be measured and should
be based upon the objective to be at
tained. Maximum safety, for the rep
resentative investor, exists between
the limits of ultra-conservatism—so
safe as to be comparatively unprof
itable, and outright speculation—rel
atively unsafe because of the uncer
tainties inherent in high returns. The
following sentetice after “inherent in
high returns.” Changes in economic
conditions, money rates, commodity
prices, gold supply, taxes and abnor
mal industrial conditions all have an
effect on invested capital and must
be carefully observed, so that securi
ties which are likely to depreciate may
be disposed of and the proceeds rein
vested. In short, the success of an
investment fund, like that of any bus
iness, depends on management, and,
to successfully martage one’s invest
ments, one must be a constant seeker
after knowledge. One of this coun
try’s foremost investment Funds, The
Carnegie Corporation, stressed th«
importance of “Vigilance” in the fol
lowing statement:
“The funds of a great Endowment
can be kept intact only by a syste
matic revision month by month of all
the securities of the Endowment and
by a continuous process of sale ani
exchange as circumstances may ef
fect the financial soundness of this
or that security which the Trust
holds.”
Spreading the Risk
The wisdom of not placing all one’s
eggs in the same basket has become a
truism in the purchase of securities
and is the epitome of the theory of
diversification. Diversification, the
distributing and miniwizing of risk,
s one of the frst prnciples of judi
cious investment, and can be intelli
gently carried out only in conjunc
tion with a “Definite Plan of Invest
ment.” Such a Plan, flexible as a
whole, combines defensive measures
against adverse and unforseen condi
tions, and offensive measures to cap
italize favorble situations, and, is
carried out through a combination of
bonds and stocks in proper appor
tionment. The primary objects of a
“Definite Plan of Investment are:
(1) The employment of capital to in
sure a satisfactory income; (2) Tha
preservation of capital and (3) The
building up of an estate.
There can be no such thing as an
Ideal Plan of Investment suitable for
all investors. The problem of each in
vestor is quite individual and differ
ent and, has to do with one’s age, bus
iness and social requirements, depend
ents, insurance and other considera
tions, and, so the carrying out of an
intelligent Plan of Investment involv
es the (purchasfng of securities that
arer appropriate as well as sound, and
in their selection following out the
principle of diversification.
Diversification in the purch'ase of
securities should be carried out along
the following lines:
(1) Distribution of Risk—so that
not more than a given percentage will
be tied up in any one industry or lo
cality.
(2) A reasonable percentage of
the total in Bonds—to insure stabil-
{ ity of income.
j (3) A reasonable percentage in
I Common Stocks—if carefully selecte i,
I they afford an opportunity to share in
j the growth and prosperity of the
j country.
j (4) Liquidity of Assets—so that
I funds may be readily >available in
j case of emergency or to take advan-
j tage of business or market opportun-
! ities.
I (5) Orderly sequence of Maturi
ties—so that funds may be available
regularly for reinvestment and extra
ordinary demands.
Investment Units
,As to the percentage of—a total
fund to be invested in any one issue;
a unit of investment should be decid
ed upon and this will vary with each
investor. P'or the representative in
vestor holding say_ $100,000 or mo're
in securities, the- unit of investment
should be about five tper cent. Neces
sarily the smaller the total amount
of the investment fund, the larger
the percentage per unit. The first one
thousand dollars of savings should be
invested in a' government bond, or in
a savings bank account, or in a build
ing and loan association. As wealth is
accumulated the unit of investment
can be set'at $1,000, then $2,000, and
upward depending on the investor’s
particular situation. In building an in
vestment account from savings, the
unit of investment may be taken as
the amount which can be saved each
year.
The greater the number of invest
ment issues held, the greater the care
necessary in order to give ach issue
due consideration. Consequently, Over-
Diversification can be carried out to
as harmful an extent as Under-Diver
sification, which is neglecting the
principle of Diversification.
One of the outstanding investment
funds of the world is that of the Sun
Life Assurance Co., of Cana*5 , whose
most recent statement showed secur
ity holdings of a total value of $460,-
500,000.00. Of this amount, 79 per
cent was represented in stocks and the
balance of 21 per cent in bonds.
Today, finance is a profession quite
as much as medicine or law. One does
not consciously go to a poor lawyer,
nor to a doctor who is behind the
times, and as a broad financial exper
ience is a necessary background for
the successful handling of an invest
ment fund, it does not seem wise to
a-tempt so serious and vital a respon
sibility without consulting and fol
lowing the advice of a reputable in
vestment house. Such an institution,
with its well organized and equipped
statistical department, and its person
nel of trained investment specialists,
has the facilities and experience to
apply the two cardinal principles of
successful investment, ‘Diversifica
tion and Vigilance.” Through its coun
sel, the investor can build up a, sound
and practical investment structure so
appropriate and so diversified that
it will continue unimpaired and gather
strength over a period of time.
Members
New York Stock Exchange
Pittsburgh Stock Exchange
Main Offioe
39 Broadway, New York City
SOUTHERN PINES—^NEW HAMPSHIRE* AVENUE
Telephones: Southern Pines 6751—Pinehurst 3821
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Southern Pines,
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Successors To
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SANDHILLS BOOK SHOP
SOUTHERN PINES
HORSES ARE COMING, AND
SPRING IS JUST AROUND
THE CORNER NOW.
An excellent authority on Sandhill pros
pects say the horse is becoming a close sec
ond to golf in the interest awakened in this
section.
Stables are steadily increasing in num
bers and the increased arrivals of horses are at
tracting attention every day.
A horse gets lonely without his folks, and
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Weymouth is the paradise of the horses.
Weymouth is the Eden of the human race.
A stable in the Weymouth neighborhood.
A home on Weymouth grounds.
That’s about the ideal of a restful life.
s. B. RICHARDSON
Real Estate
PATCH BUILDING
Southern Pines.
• •
North Carolina