Arizona republican., 1917-05-27

to mature one year from the date of issue. The bonds and certificates are to bear interest at the rate of Sla per cent per annum payable June 18th and December 18th of each year.
 The bonds are to be tax free for all purposes except the estate or inherit ance tax In the event that it is neces- Sary to issue more bonds at a higher rate Of interest. this present issue is convertible into bonds bearing the higher rate, thus insuring to those wno come forward at this time with their funds rhe same return as those who in- vest later
 In order that we may more effectu- ally provide for the national security and defense and the prosecution of the war, the act authorizes the loaning of three billions of dollars to our Allies. These funds will be used for the estab- lishment of credits in this country and will be loaned ct the same rate of in- terest which the government will pay, with the proViso that in the event of this government is required to pay higner interest rates, the rate to our Allies will be increased to the same amount
 The bonds are to be issued in both coupon and registered form. The cou- pon bonds will be as small as S50.00 and from that up to s10O0. The regis tered bonds will run from $l00 up to S100,000. These denominations make it possible for everyone to purchase 6 bond according to his resources.
 4 very natural question that will confront one who is not familiar with credits is. how can we pay for two billions of bonds, which is the amount now offered, when the amount Of non- eA in circulation on May l. 1917. was only approx imately five and a half bil- lions. The answer is that it is to be done through a shifting Of credits. We will say that Mir. Smith has de- posit in the x National bank and de- sires to subscribe for one thousand dollar bond, using part of his credit to pay for the same. If the government were to immediately deposit his check in the drawee bank the result would be mere transfer of credits without an actual exchange of money. This however will not be the result The funds will be placed with the Federal Reserve banks and will cause shift ing of credits among the banks and will result temporarily at least in some disarrange of our credit structure.
 iAG cIGt ltdS tdtAtl AllLO cOitSlUtTdLlcfl this fact and authorizes the secretary of the treasury to deposit the proceeds of he loan in such banks and trust }companies as he may designate to the extent If the withdrawals from pay ments oI subscriptions plus the amount for which the bank itself may sub scribe. The treasury department is already taking steps to ascertain the aniodn,S of such withdrawals in prep aration for making such deposits The funds will then be disbursed in pay ment of goods and services and will work their way back again ready Tor the same process if necessary.
 The loan is, as we know, the largest ever authorized in the history of the nations, but this nation is well able to handle the transaction. The wealth of the United States, according to figures supplied by the comptroller of the currency, is in excess ot two hun dred twenty billions and our debt, in cluding the present issue of bonds, will amount to about six billions, and the total debt represents but small DOT ton Of our annual income. our per capita debt. including the new loan, will De only about S50.00, while that of the United Kingdom was on about March 3lst very close to SJ00.
 - The resources and ability of the na- tion to pay are of course unquestioned and it is perhaps this tact which is