New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-04-28
Friday, April e., 1911

Opinion in banking circles is still
sharply divided as to the amount of
government bonds which should be
brought out in the initial offering.
Some argue that no more than two
billions should be offered at once,
because they believe that larger
amount could not readily be alb
sorbcd by private investors, with
whom it is desirable that the whole
loan should be firmly placed. Others
hold that instead of a series Of
smaller loans, which might have to
be sold at progressively higher in
tcrcst rates. it would be better to
offer the whole five billions at once,
making it payable in several install
ments. This, it is suggested, would
place the proceeds at the disposal of
the government as rapidly as need
ed and at the same time promote
heavier subscriptions to the bonds.
But while there are differences Of
opinion as to the amount which
should be offered at first, all are
agreed that great publicity cam
paign must precede the offering,
There is every reason to believe that
such a campaign will be conducted
on scale never before attempted.
Bankers who have been in cOmmuni-
cation with officials at Washington
say that the authorities are proceed
ing in a manner which promises to
insure the fullest possible success
for the loan. While so far as can
be learned no definite scheme has
been formulated as yet, it is known
that the Treasury Department has
under consideration plans for a ma
tion-wide educational propaganda, as
well as for the organization into one
great distributive system of all avail
able agencies. Moreover, the bank
ing community will not, as was
feared, be ignored. Investment
bankers Of long experience in the
wholesale and retail merchandising
of securities have already been con-
suited, and expect to be consulted
( again before the governments plans
are brought to maturity. Indeed, 1t
is not impossible that a committee
composed of leading bankers from
various parts of the country will be
formed to cooperate with the Treas
ury Department and the Federal Re-
serve Board in the handling of the
operation.
Success in this case does not i'm
ply merely full subscription of the
Offering; it means that the bonds
must be placed in such a manner
that, once sold, they will "stay put"
And the whole transaction must be
conducted in such a manner as to
prevent unnecessary disturbance Of
the credit structure. The latter, in
fact. is one of the most serious Of
the many problems connected with
the operation, but a simple solution
is offered by the president of large
/ financial institution. He suggests,
as the best way of preventing un-
due shifting of banking resources,
+ that subscriptions be received only
within the borders Of the various
/ Federal Reserve districts. That is,
that a subscription made in, say, the
Philadelphia district should not be
RENTED to an institution in New
York, but should be kept within the
district of origination. The same
authority also says that, while it
would be highly desirable to have a
free market for the bonds after they
are issued, all transactions on a
"when as and if issued" basis should
be strictly prohibited. Otherwise,
the "over-the-counter" market for
the loan might be seriously affected
If such transactions were made be-
low par, it might cause some poten-
tial subscribers to hold back; and if
above par, there might be good
many who would buy for specula-
ton. only to resell Immediately, and
perhaps unduly depress the market
nricc.