The Washington herald., 1917-04-13
A Word to the Wise.

great variety of heavy problems, and
it has started upon their solution with
energy and, we believe, farsighted-
ness.
We have been somewhat disturbed
by what have read like semiofficial
announcements from the Treasury De-
partment that the Treasury was about
to undertake the flotation of loan
of $5.ooo.ooo,ooo 3I-2 per cent bonds; [;
of this amount three-hfths. to be alot-
ted for the needs of our allies abroad,
and two-6fths to be kept for our own
requirements.
We hope that the Treasury will not
attempt any such operation in the
near future, for in eur humble judg-
ment if it does, it will meet with dis
appointment. There are several rea-
sons that lead US to this belief. Rough
ly, they are as follows:
First. There is not in this country
$1,000, ,ooo, 900 awaiting investment,
nor anything like that sum. Despite
the rapidity with which wealth has
accumulated here in the last few
years, we have not yet reached a
point where we have lying idle, await
ing investment, any such prodigious
sum as this;
Second: There is no present dispo-
sition in the country to invest its
last dollar OF valuable funds in a
government loan. We say this despite
our firm conviction that the country
at large is thoroughly patriotic and
will rally to the support of the gov
ernment to every reasonable extent.
We must, however, bear in mind that
up to recently VIC have been bor-
rowing, not lending people. We
have been accustomed to invest the
bulk of our earnings not in current
securities, but in our own immediate
properties. II the manufacturer has
made an unusually satisfactory profit
in one year, he has put that profit
back into extensions and improve
ments, so as to increase his profits for
another year. The same holds true
of the merchant. Indeed, it is most
true of the farmer, who out of the
prosperity OF one year increases his
acreage and operations for the next
So strongly has this habit of enter
prise fastened itself upon our people,
that it is going to take an education
of several months to induce them in
large measure to turn their earnings
into the form of government bond
purchases;
Third: In any event, the rate Of
interest as reported, 3I-2 per cent is
not attractive enough in our opinion,
even though the bond be given a con-
vertihle clause. We see no reason in
the world why the government should
expect to borrow money much lower
than the going rate. OF course, owing
to the stability OF the security, the
government can naturally be expect
cd to borrow its money lower than a
private corporation; but to expect
people to run to invest their money
at 3I-2 per cent when they can in
vest it in sound current securities at
$ to 6 per cent, or put it back into
their reproductive enterprises at a
handsome profit is to expect too
much. Americans arc Americans, but
first of all they are human beings.
Inasmuch as we have had the
temerity to advise the Treasury and
Congress what not to do, we are go
ing to be so bold as to offer them a
little counsel gratis as to what they
should do:
First: Let Congress at once au-
thorize what we understand to be Mr..
McAdoo's recommendation, namely,
the issuance of $4,000, 100000 United
States government bonds, and $4,000
100000 of Treasury certificates, the
maturities, the rates of interest, and
the methods of handling each one Of
these two issues to be left to the
discretion of the Treasury. What
is the use of Congress attempting
t0 dictate ~ The Tra,sur,, Do.,-.