The Kinsley graphic. [volume] (Kinsley, Kan.) 1890-1940, 1902-09-05
FALsEHooD OF REPUBLICANS.
One of the Gross Misstatements Of the
''Grand Old Party's" Cam
paign Textbook.

Official documents and everywhere
in fact, have been boasting at the
very high prices at which our two
per cent. bonds sell, or, in other
words, at the very low rate of in
terest at which this government can
borrow money as compared with
other nations. Thus, in their cam
paign textbook, the republicans say:
Uncle Sam is the only one on earth
who can borrow money at two per
cent. and the bonds be at a premium
at that"
A half truth is always the meanest
kind of a lie, because it is difficult
to disprove. 1t is not only unfair to
compare our bonds with the bonds of
most other nations, but it is abso-
lutely false to state that Uncle Sam
can borrow money at two per cent.
and have the bonds sell at a pre-
MUM.
1. The bonds of Great Britain, and
of some other European countries,
are subject to income and perhaps
are exempt from any and all kinds
of taxation.
the price of our two per cent. bonds
and the government bonds of Great
Britain and France is unfair because
the price of our bonds is unduly en-
HANGED by the artificial demand Gre
ated by our federal banking laws,
which require national banks to
own these bonds and deposit them
with the United States treasurer.
This enhances the price of all our
bonds.
3. But in the case of our two per
cents, there is a further artificial
stimulus or special privilege in the
provision that the tax on national
bank notes secured by these bonds
shall be one-half of one per cent.
less than the tax on notes secured
by all other classes of bonds. This
makes these bonds, for purposes of
national banks, practically 21h per
cent. bonds as compared with all
the other issues. The government
pays only two per cent. outright,
but, so far as the bonds are held
as the basis of bank currency land
most of them are so held) it pays
another half per cent. in remission
of taxation on the bank currency.
This explains why the two per cent.
bonds sell so much higher in pro-
portion than the three, four or five
per cent. bonds. The four per cent.
bonds of 1925 now sell for about 1873,
and the twos for about, 1OS. This is
on the basis of about 2.15 per cent.
interest for tours and LIS for the
twos. If, however, the so-called twos
are considered as 2h per cent.
bonds, as may be properly done, they
| will be found to be selling on the
basis of about 2.12 per cent. interest.
Virtually, then, the United States
pays indirectly premium on bonds
of one-half of one per cent. to the
holders of two per cent. bonds. If
it would raise this premium to 21a
per cent. it could borrow money
without interest. If it would make
the premium five per cent. it could
receive interest on its own debts,
and it's creditors would be bidding
against each other for the privilege
of owing Uncle Sam money, just as
walters in restaurants, where tips
are numerous and large, pay the pro-
prietor for the privilege of serving
his guests.
All of our government bonds en-
joy special privileges, and our two
per cents are more favored than the
others. If all privileges were taken
away from our bonds, they would
probably sell so as to yield a net
income of about 2.25 per cent. That
is, the government could issue 2A
per cent. bonds and sell them at par.
1t cannot, then, borrow money at
two per cent. on ordinary bonds and
sell them at par, and the Statement
in the campaign book is false.