The Washington herald., 1917-05-16
HOLLAND LETTER
The Biggest Daily
Financial News Feature
of the County's Best Newspapers.


Secretary OF the Treasury, william G.
McAdoo. relating to the issue of the ST.
OOO. 100000 loan. there appears to be a clear
intimation that the Secretary is per-
suaded that the time may not be distant
when the government will find it ex-
pedient again to approach the American
people, asking them for another large
loan. perhaps as much as 5000, 900, 900
What the Secretary intimated, men Of
finance are certain will be the fact. per-
haps before the end of the presenl
calendar year.
The Secretary is anxioues that this shall
be popular loan in the best meaning
OF the word, and he is, therefore, de-
termined to issue bonds of denominations
as low as $50. Very likely Secretary Nc
Adoo is familiar with the experience of
John sherman, one of his predecessors
as Secretary Of the Treasury. Mr.. Sher-
man was persuaded while considering the
loan, sometimes called the refundinE
loan and sometimes the loan with which
to assist him in resuming specie pay-
ments on January /, 1879. that II the
plain people had a good chance to sub
scribe they would come forward in large
numbers to purchase bonds of the de-
his test and to use the facilities of the
New York Postoffice as the center of tn.
transaction. Many hundred responded to
the offer, and long lines of presumed ap-
plicants for $50 bonds stretched from
the New York Postoffice far down Broad
way. But within a day or two it was
discovered that brokers had placed many
dummies in this line with intent to
secure bonds because an immediate pre-
mi At
for those who bought at par. The re-
suit was that the brokers got most OF
the bonds. and Secretary Sherman found
it eNpedient to end his experiment
Nevertheless he was always persuaded
that the failure of this experiment was
not to be traced to the disposition of the
American people, but to the lack OF
adequate machinery whereby the bonds
could pass directly from the Treasury
Department to the people
That was in time of peace and of great
prosperity. Secretary McAdoO's offer is
made in war times, but also while pros
perity undreamed OF prevails throughout
the United States. Moreover Secretary
McAdoo's machinery for distributing
bonds of as low a denomination as $50
is excellent and the presumption
is that a large amount of these bonds
will pass into the hands OF the people.
At present there Is little apprehension
lest the people who have deposits in the
saving banks withdraw some portion of
them for the purpose of buying govern
ment bonds. of the present loan. There
is. however, some apprehension lest at
the time when new loan is offered. and
If the revenue tax measure is not nicely
adjusted to loan proposition. the people
would be disposed to withdraw deposits
from the savings banks. certainly in case
a new loan was issued in excess of 31-2
per cent. That would be deemed un-
fortunate and might cause some disturb
ance in the securities market. For II
a considerable portion Of deposits in the
savings banks were to be withdrawn for
the purpose Of subscribing to the new
loan. then the banks would feel justified
in selling securities in order to strength
en- their condition. II this were to be
done, it might tend to depress the mar
ket value of securities.
One of the sections OF the revenue bill
now before the House OF Representatives
provides for a horizontal increase of Gus
toms duties. The feeling commonly ex-
pressed here Is that this plan may have
been adopted by the House committee
without due consideration of its economic
effect. When the late Col. William r.
Morrison was chairman of the Ways and
Means Committee Of the House of Rep
resentatives in the early sos. John g.
Carlisle. being Speaker of the House, he
reported to the House what was the
shortest revenue-raising measure ever
reported from the committee to the House.
II was not more than two or three lines
in length and simply provided for hOri-
zontal reduction of duties. 1t was not
long before discovery was made that the
measure. if it were adopted, would seri-
ously impair some industries and greatly
benefit others Whether a horizontal in
crease of customs duties would impair
some business and greatly benefit other
lines of business, the Ways and Means
Committee undoubtedly considered, but
it appears to be the opinion in the finan-
cial district that the discovery Will be
made, if the measure became a law, that
its general effect will be seriously to i'm
pair business so as considerably to lessen
the revenue the government expected to
receive, from this source.
Much the greater part OF the money
Secretary McAdoo will receive on ac-
count OF new loan will be widely and
wisely distributed through the deposits
he will make in various banks through
out the country. In that way, as has
been the case with the loans made by
Great Britain at home, any serious dis
turbance of the money market would be
prevented. The government Is now pre-
pairing to enter into contracts and, in
fact has already made new contracts,
of at least 500. 900 600 to American manu-
faCturers of munitions and various equip
ments of war. These funds will pass
sooner or later into general circulation.
While the members of the Federal Re-
serve Board at Washington and many
bankers are urging care lest the tendency
to imitation be too strong to resist, never
theless Secretary McAdoo is believed to
have within his power an excellent
means of preventing undue imitation.
For leading fnanciers say that II he puts
out new loans too rapidly. imitation will
inevitably follow. whereas IL he offers
and markets loans at long intervals, that
tendency can be easily combatted. 1t is
a difficult question to decide where busi-
ness prosperity that is healthful ends
and imitation begins. Prudent and skill
full administration of the handling of the
loans and wise perfecing of revenue
measures, it is believed, will make it easy
wisely to stimulate business so that it
will be capable of responding to any
call of the government without such
stimulation as would lead to imitation,
which would surely in due time cause
serious and perhaps disasterous COLLAPSE
HOLLAND.
LECTURES ON LEPER COLONY.