Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1917-12-14
BOND PRICES.

is Liberty bonds are quoted below par. The fact is be-
ing made the basis for. considerable comment, and it is
suggested that the government ought to do something
about it. 1t is maintained that it is a gross injustice to the
poor man who has invested his savings in a Liberty bond
to have the price of his bond decline because then some
rich capitalist can buy it at a reduced price, thus depriv-
ing the poor man OF something that belongs to him.
The line. of argument is substantially that because of
the excessive profits which are now being made out OF
war contracts and out of industries whose business has in
other ways been stimulated by the war, more money can
be made in other investments than can be made from
government bonds. Hence the price Of government bonds
'shrinks. Capitalists will, in the meantime, buy. large
quantities of the Liberty bonds at reduced prices. and,
when normal conditions return, all the bonds thus bought
at cut prices will be in the hands of wealthy people, and
when the desirabnityN of other investments has ceased
the price of Liberty bonds will advance, and the greedy
monopolists will be in the possession Of property pur-
chased below its true value. and which, when other in
vestments have ceased to be attractive. will yield hand
some returns.
The remedy proposed. so far as any has been sug-
gested, is to levy such heavy taxes on profits that other
investments will be no more desirable than government
bonds. Then, when the income from Liberty bonds. three
and one-half or four percent, is as much a: can be de-
rived from any other investment. the price Of the bonds
will remain at least at par, and the capitalists cannot
obtain them without paying the full price.
A short time ago a great many people were disturb
ed over the fact that wealthy people were investing con-
siderable sums in Liberty bonds. 1t was true that the
government was trying to sell the bonds. 1T needed the
money. 1t had to have the money. But it was assumed
as a matter of course that the man who bought a million
dollars worth of the bonds must be doing so from some
corrupt motive. This was doubtless on the theory that
a man who has a million dollars cannot do anything
right. Now it is proposed that the industrial situation
he changed so as to encourage these large investments
in government bonds by making them desirable as an in
yestment as there is. Pity the rich man--nobody loves
him. u
1t may he suggested that the only people who can
possibly lose, any money, on. the drop inythe. market price
of bonds from par to the current market figure, some
two per cent below. are those who wish to sell their
bonds. The man who bought a bond with the expecta-
ton of keeping it need not concern himself with the mar
kt price. The bond is worth to. him exactly the 800
he paid for it, no more and no less. That bond is the
governments contract to pay him 500, alta given date,
with interest at the rate provided, 3 12 or 4 pei cent. de-
pending on the issue. That interest will be paid twice a
year during the life of the bond, and at the end of the
term the 800 originally borrowed will be returned. The
market price may go up or down in the meantime. He
need not care.
The man who plunged into the bond business in the
hope that the price would Immediately jump to more
than par, when he could unload at a profit, will be dis
appointed. He may lose some money, for if he has load.
ed up too heavily, he may be forced to unload at a sac.
rifice. But, as to that, who cares? He took the chance
that the Spectator takes. and let him stand his loss. A!
for the small investor who bought in good faith for the
purpose of retaining his bond, the market price does no
interest him.