New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-09-29

A good deal Of confusion has
arisen over the conversion priv
lege feature of the forthcoming
Liberty Loan as and the outstanding
S1ks. The question has been raised
whether the ruling as regards the
conversion privilege on the impend'
ing issue applies to the SIS. Secre-
tary of the Treasury McAdoo appar'
emily has seen the ambiguity, and IN
his address, before the American
Bankers Association at Atlantic
City took pains TO 90 into details In
explaining this matter. Speaking OF
the new issue of 4 per cent bonds to
be offered next week he said:
II subsequent series Of bonds
bearing interest at higher rate
than 4 per cent per annum should be
issued by the United States before
the end Of the war, then the holders
of these bonds will have the privi-
lege, at their option, at any time
wishin six months after such issue is
made. of converting their bonds st
par into bonds bearing the higher
rate of interest al the price, not less
than par, at which the bonds bearing
interest at the higher rate shall be
offered for subscription to the public.
Of course, bonds bearing interest at
a higher rate than 4 per cent cannot
be issued without further legislation
by Congress, and if such an issue
should be authorized not only the In
terest rate but also the general char
meter Of the bonds will be determined
by Congress or by the Secretary of the
Treasury under the authority Of an
act of Congress-; and the holders OF
the 4 per cent bonds will be entitled,
If they wish to do so, to receive
bonds Of the character so deter
mined. except that the bonds issued
to them, if they exercise the privi-
lege OF conversion, will have the
same date Of maturity, the same in
terest dates and the same date for
redemption before maturity as the
per cent bonds now offered. If this
new conversion right arises II must
be exercised within the period pre-
scribed by the Secretary of the
Treasury. or II will come to an end.
The object Of this privilege of con-
version is to place the investor In 4
per cent Liberty bonds in position
Of substantial equality with the pur-
chaser of bonds of the next issue at
q higher rate, II any be made-not to
give him a position of superiority
from which he might pick and choose
between various bargains which
from time to time might be offered
bv the United States during the
course of the war. If the new bonds
into which conversion Is made carry
also conversion privilege, then
that privilege may be exercised with
respect to a subsequent Issue, at the
holders option.
The provisions for conversion are
substantially determined by the act
of Congress recently approved by the
President and under which the
III bonds are offered for subscription.
y OF course, this act of Congress does
not affect in any way the rights Of the
holders Of the S12 per cent Liberty
bonds Of the first issue. Their rights
were fixed by the previous act, and by
the terms Of the circular offering
these bonds for subscription, and by
the terms of the bonds themselves.
They may convert their bonds into
new 4 per cent bonds just like those
now being offered for subscription,
except that the bonds issued upon
such conversion will have the same
maturity of principal and interest
and redemption date ss the old Sla
per cent bonds, or they may keep
their 3h per cent bonds II they
prefer.
According to Secretary McAdoc
the old law under which the Sh pc
cent Liberty bonds were issued diff
fers in one respect from the new Lax
under which the a per cent bond
are to be issued. The holders of tn
3As, while they must exercise tn
privilege of conversion into the
ger cent bonds within the period o
six months beginning November II
if they desire to exercise it at al
would have the right, if subsequent
ly bonds should be issued at a still
higher rate, say Az per cent agai
for the period Of six months begin
ming at the date of the Issue Of thos
bonds, to convert those bonds int
Az per cent bonds, even though the
had not made an intermediate con
version into the A per cent issue. Il
other words, this means, according
to the Secretary, that holders of tn
31ks, by not exercising their priv
lege of conversion in the case of tn