The Washington times., 1917-09-29
$4,000 HERE
HAVE CHANCE
TO PROFIT ON
BONDS NOW
By BILL PRICE.

The $4,000 Washingtonians who
own interim certificates representing
the first Liberty loan issue Of 3I3 per
cent bonds are in an enviable posi-
ton today. They have an opportun.
ity to sell their certificates for a small
premium. should they desire, or ex-
change them later for bonds bearing
per cent interest. these in turn TO
be eXchangeable for bonds bearing
still higher rates Of interest. should
the Government later be compelled
to pay Az or per cent.
The stiffening prices for the 3 L
per cent certificates are due to the
fact that they are entirely tax eN-
empt. and are being eagerly sought
by wealthy men who wish. TO escape
the surtaXes imposed BY the war rev
enue bill. These surtsNes will apply
to the new 4 per cent bonds above a
certain amount
Greet SurtaxeH With Disfavor.
Men of much wealth, looking to-
ward the surtaXes with no favor. are
dispOsing of many OF their holdings
of stocks and bonds that will be
= reached by the surtaxes and are in
vesting in 3la per cent. certificates.
state. county, municipal and terri
torial bonds that are tax exempt.
The last four classes OF bonds are
agencies OF sovereignty and have
been exempt from Federal taxation.
Investing houses report that sfor
the last few weeks there has been
heavy demand for the last Liberty
Loan issues, with the result that in
New York yesterday these Govern
ment obligations went to 10O24, or
premium of nearly one-fourth OF
per cent. the purchaser also paying
the accrued interest.
Interesting Position Disclosed.
The mighty interesting position is
presented OF holders OF millions OF
the last Liberty loan issue declining
to take advantage OF an offer OF
conversion into bonds bearing high
er rates. a proceeding that would
ordinarily result in a scramble to OBJ
tain the higher rate obligations.
Holders OF amounts OF the 3E per
cent bonds that Will not be affected
by the surtaXes will eagerly take ad5 :.
vantage OF the offer to convert
Banking institutions in Washing
ton that pay liberal interest rates
upon deposits have been giving seri-
Gus consideration for some time to
the possibility OF having to raise in
teTest rates upon deposits to hold
their depositors. in view OF the COM
ing 4 per cent issue uf Government
bonds. All the banks have increased
deposits in spite OF the payments
made upon the last issue OF Govern
ment bonds. The activities Of busi-
ness throughout the city. the large
additions to population. have given
the banks the heaviest deposits with
in their history. and they are able
to lend every cent at per cent ow-
ing to money demands.
Question Now Presented.
The question now presenting itself |
is whether small depositors are GO
ing TO be largely attracted BY the I |
per cent. bond Of the Treasury and |
draw heavily upon their deposits to !
the extent Of making il advisable !
for banks to hoist interest rates on |
deposits to encourage increases in (
that line.
The banking institutions or Wash |
ingtoR do not view with cquan- /
nimity the attempt they may have to I
make to compete with the United \
States Government in the matter or |
Interest allowances to creditors.
With stiffeninE money rates the !
banks might be able to enter into the !
competition for the present. but the .
danger is in the future, when money |
is easy. Once an interest rate is in
creased il is practically impossible to I
make a decrease. banking officials !
say.