The public ledger. [volume] (Maysville, Ky.) 1913-1968, 1918-03-13

based on the funds then in hand, plus
the $1S,775, 100000 given in the report
as the expenditures for the year. But
from the monthly statements issued
since last December, 1t appears that
the $1S,775,000,000 estimate Of this
years needs was entirely too high
From the actual expenditures for two
thirds of the year, It appears now that
the needs for the rest of 1918 up TO
June 80, to be supplied by the sale
of bonds, will not exceed $4,000 ,00O,-
900.
Last Liberty Loan
The last Liberty Bond offering was
for $4,000 100000, with so per cent. of
over-subscriptions to be taken. The
total amount subscribed for was $4,-
600,000,000 and the total allotments
$500 ,000, 900. If the subscriptions to
the next bond issue are just little
more than those for the last offering,
the government will get all of the
funds needed this year. For some
time after the beginning of the new
fiscal year, July l, 1918, the govern
ment will be kept in funds through in
come tax, the checks for which must
be dated not later than June Is.
So much for the amount to be raised
in the next government war loan. AS
to the length of time the bonds are to
run it must be assumed first from the
experience of England and other coun-
tries that each successive issue must
make concessions to the investor.
Granting that it must be admitted that
the government should not be saddled
with steadily increasing carrying
charge for twenty-five or thirty years
if a short term loan could be negotiat-
ed.
In that connection it must be kept
in mind that the carrying charge on
the outstanding war debt rolls up very
rapidly because each issue has car
ried the right of conversion into sub
sequent issues bearing a higher in
terest rate. Thus if the government
should now issue $5,000,000000 AVS
the $4,000, 100000 outstanding 3Rs
and the $4,000, 100000 As, both could
be converted into the new Avs, max
ing carrying charge of Az per cent
on the whole $1O,S00,O 100000. That
burden should not be carried one day
longer than necessary.
Can Refund Bonds
No one believes the war will last
ten years, and at the end Of the wal
an outstanding bonds can be refunded
into As or even 3hs, thus greatly re-
ducing the carrying charges. In Other
words, a $5,OOO,OOO,OOO Az per cent
ten-year bond issue put out now
would almost certainly fall due after
the war was over.
would not be safe to put out a
five-year bond. That bond might come
due while the war was still on. The
result would then be that all out,
standing war indebtedness would have
to be refunded perhaps on per cent
basis or even higher.
Expressed another way, theoretical
ly, the government should make each
new bond offering fall due as soon as
possible after the end Of the war tc
ave a heavy burden of interest
harges. The difference in the annual
arrying charge on $1O,O00,000,O00 al
81 per cent instead of AZ per cent
would be s1OO,OOO,OOO.
Besides that saving in annual inter-
est there Is another reason why short
term bonds should be sold. The 3hs
run thirty years and the As twenty
five. The advantage Of a short-term
tissue over one running a long time
is that in a loan of the kind first
named there will not be as much mar
ket depreciation. The shorter time q
bond issue runs the more Importance
Is attached stockmarketwise to the
date of maturity. Here is an example
OF how a short-term issue works to
the advantage of the helder stock
marketwise:
How Shorte.Term ssue Works
Income Return Income Return
On Per Cent. On Per Cent.
Market Bond Running Bond Running
Price Ten Years. Thirty Years
100 .400qs 44.00&