davidaulloa/AmericanStories huggingface dataset:
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1918-02-10
Five Year Loan the Solution
By c. F.. Mitchell
President National City Company

fFeSAeHt Ndtt0Hdt CUy company
account and in the loans made to
customers secured by government
obligations. This burden must be
carried by banks in face of I. full
appreciation Of the fact that they
must continue to remain LIQUID.
Banks must, however, look forward
to the day when the burden shall
be lightened.
Is not, then, the problem partly
solved if the securities to be issued
by the government be of such short
term in the present instance so
that the banks may look forward
to a time within a brief period of,
say, five years, when they not only
may, but must be, relieved of the
burdens now to be assumed?
Any depreciation in the price of
short-term securities increases the
interest yield with. such rapidity
that it is inconceivable that five
year bonds could go to any sub
stantlal discount. A drop of one
point IN a five-year security in
creases the interest yield nearly
one-quarter OF l per cent. and two
points nearly one-half of l per cent.
This rapid increase Of yield, a
rapidity which is entirely due to the
short term, will be the most potent
factor in maintenance of prices
that can possibly be found. Until
such time as distribution of out
standing securities becomes so COM
plete that digestion can be said to
have taken place it is of the utmost
Importance that prices be held at
levels which will not brighten the
investing public.
A tive-year obligation does not,
apparently, react to the benefit of
holders of Liberty Loan 4s, but, in
asmuch as special legislation must
in any event be necessary for
short term securities, it would
seem to be simple matter to
provide special privilege to hold
ers Of Liberty Loan as to convert
their present holdings directly into
the short term issue. Such a privi-
lege would forthwith advance the
price of Liberty Loan 4 per cen,
bonds to parity or close thereto
and would improve the feeling
among present holders so that they
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1918-02-10
Liberty Loan Must Yield Higher Return Investors Is Bankers Vie
sary in order to insure large over
subscriptions to a new loan:

sary in order to insure large over
subscriptions to a new loan:
1t would seem to me that it would
be better to make slight advance
in the Liberty Loan rate rather than
to sell 4 per cent bond at a dis
count. The prime essential is to
have the issue literally oversub-
scribcd. Other considerations would
seem to me to be Of minor impor-
lance compared to this.
1t would seem to me that the sale
of Treasury certificates Of indebted
ness should only be used as firal
resort when bond issues cannot be
sold on the right basis. I, Of course,
am not abiding to temporary GER
tiicates taken by banks in anticipa-
ton Of bond sales.
Short-time securities of the govern
mcnt only temporize with the situa-
ton and when used should be taken
by banks and financial institutions
pending longtime financing to be
taken by the public. SO far as the
Northwest is concerned, we are in
excellent shape. While money is in
good demand there will be no diff
Guilty in the centres taking proper
care Of all calls for legitimate pur-
poses.
f. l.. Robinson, vice-president of
the Eutaw Savings Bank Of Balti-
more, a banker high in the councils
of the Savings Bank Section of the
American Bankers Association, thus
summarizes the situation:
Having noatcd the two previous
loans at par and having agreed with
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1918-02-10
Much Opposition to
Short Term Loan

This means that the third Liberty
Loan to be announced soon will
carry 4 per cent interest, if it is
possible to offer inducements suffi-
cient to make investors bid par for
a bond carrying that rate. Patriot
ism is always an important factor
in the successful sale of war loans,
but the two and one-half billions in
taxes which the people must pay
over to the government by June Is,
together with the burden of in
creased living expenses, make it
necessary for the average investor
to secure as large a return from his
securities as it is possible to OBJ
tain. Various expedients have been
suggested to the Treasury for meet
ing the situation, a novel proposal
being for the issuance of a bond
carrying an indeterminate rate of
interest, so as to protect the mar
ket for other securities. This would
lead to confusion, however, and per-
haps imperil the success of the great
loan. Other bankers believe that the
government, by issuing a five-yeay
loan, could obtain what money it
needs at a per cent, since there is
always q broad market for a high
grade security having only few
years to run. This method of finan-
cling is opposed, however, by many
az being unsuited to the needs of q
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1918-02-10

would be more favorably inclined
TO the strong appeals which must
be made for their further subscrip-
tions.
The question Of rate is, of
course, a vital one. Four per cen,
obviously does not attract invest.
ment money to-day. The very fact
that Liberty Loan as are selling
on approximately Az per cent
basis is conclusive evidence, not
only that a per cent rate does
not attract, but that a 4 "A per cent
rate does not attract. 1t would
seem clear, then, in consideration
OF the volume of financing which
must be done, that the rate must
be made attractive, and the evil
dence is that that rate should be a
e per cent rate.
From these reasons the conclu-
sion may be drawn that a tive-year
4 1a per cent bond would appeal
to the public, and not only would
be assured Of success in it's fota-
ton, but would react upon existing
Liberty loans SO that sentiment
relative to them would be improved
to the point where less liquidation
and better market would unoues-
tionably occur.
The suggestion has been made
that a short term issue of this char
acter be made convertible at matu-
rity into a long term 4 per cen.
issue. My own feeling is that after
the close Of the war and with
finances approaching more nor
NAL condition the government will
be able to refund any outstanding
short term issues in large volume
at at least a per cent interest
rate and possibly at lower rate,
If, however, the convertible feat
ure will popularize the issue it
would seem desirable.
The next issue of government
bonds must be made tremendous
success, and the degree of success,
to be attained depends in large
measure upon the satisfactory
solution Of the problems of detail
which are now under such constant
consideration by the bankers of the
country.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1918-02-10

to everything but government bonds
Funds for commercial purposes arc
available from banks for all "essen-
tial" business because banks are
conserving their resources for such
financing.
David r. Forgan, president Of the
National City Bank of Chicago
thinks that the government has a
sufficient problem to solve in deter
mining proper rate for the forth
coming loan. He says:
think the terms of the next Lib
erty Loan offer one of the hardest
problems ever put up to financiera.
The influences are so far-reaching
that it is very difficult to decide just
what is best. I do not favor adj
vancing the rate of interest to Az
per cent, but would rather see it Az.
I think that rate would be less detri-
mental to general investments, and
the bond at that rate would continue
to sell at about par.
do not think the government
should attempt to finance war out
lays through the sale of Treasury
certificates running for short period.
l think such transactions should be
confined to anticipation of the issue
of Liberty Loan bonds as they are at
present. l do not favor selling such
short-timc securities direct to the
investors when banks can take care
of them.
James A. Latta, vice-president of
the Northwestern National Bank of
Minneapolis, thinks that slight adj
vance in interest rate may be neces-
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1918-02-10

TIME task Of distributing the
third Liberty Loan pre-
sents extraordinary prob
lens which must, and of course
will, be overcome. The first and
second loans, involving long-term
financing, and especially the sec
ond Liberty Loan, have not been
digested; that is, the distribu-
ton into the hands of invest
ors who hold by choice has
not gone so far but that there
is constant pressure Of these bonds
upon the market. The result
is low prices, which will act as a
damper upon the enthusiasm Of the
general public in the purchase of
any new issues. So long as these
prices remain at their present low
levels, the pinch of the loss, even
though it be book loss, will retard
buying. Purchasers on the install
ment plan are still in process of
making their payments, and the
way has not yet been cleared for
the taking up of further burdens
by these smaller purchasers, espe-
cially with the cost of living con-
stantly increasing. That portion
of the population of the United
States who must take the great
bulk of new government issue
will, during the next few weeks, be
making up their income tax re-
turns, and will be faced with the
necessity of setting aside large
amount of cash for payment of in
come and war excess profits
taxes. Many will ask themselves
if their enthusiasm in the purchase
of Liberty bonds heretofore has
not been overstimulated, and many
who have purchased freely, and
have, at the same time, spent free
ly, will be perplexed as to where
the money is coming from to pay
the tax upon their 1917 incomes.
The heatless days, the shutting
down of factories weekly, and the
loss in wages adds to the prevail
ing depression.
That the banks of the country
must bear an increasing burden in
government financing is obvious.
That burden is to be represented in
the bonds purchased for their own
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1918-02-10
and the Fifth-Third National Ban.
Of Cincinnati, saws:

and the Fifth Third National Raj,
Of Cincinnati, says:
If the government authorizes (, "a
able bond, think the rata vel,
necessarily be Az per cent Int
will prefer to see per cent ~.
taxable bond issued. This vous,
neccssitate additional legislation =
order that the present per cent %.
able bonds would be made non...-
able. The issuance of new
cent non-taxable bond would not a.
feet the prices of other securit;s.
much as the issuance of a Az n
cent taxable bond. pe'
Clyde H. Folsom, government bond
expert, believes that higher inte,
est rate than 4 per cent is called for
My feeling has been for some tim.
that it will be necessary to MAKE
the next issue a Az per cent bond
unless it should be finally decided
to make the bonds tax-exempt, which
is not generally favored. While
per cent taxable bond might he
forced on the market, the countv
as whole would not willingly par.
ticipate in a loan of that character
1t has been suggested that it seemed
necessary to name Az per cent rate.
the time to be limited to FIVE years. ;
which might seem best, as the prior
issues would not be convertible into
an issue of this character.
If l were to decide the matter.
believe would issue Ak per cent
five-year taxable bond, as without
doubt conditions following the war
would make it possible 70. con.
veniently redeem the loan within
five years.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1918-02-10

think there is no doubt that 4
per cent tax-free bond would sell
quicker than Az per cent bond that
was subject to the surtax. 1t may be,
however, that the same reasons which
caused the government to change its
policy in connection with the second
Liberty Loan will have to be rcck-
oned with, and that there is no in
tcnton of returning to the former
policy of issuing tax-exempt sccuri-
ties.
William A. Law, president of the
First National Bank of Philadel-
phia and ex-president Of the Ameri-
can Bankers Association, does not
want to see the government offer a
Az per cent bond. He puts it thus
l sincerely trust that the Treasury
Department will not decide that the
third Liberty Loan shall bear high
er rate of interest than per cent.
Should a Az per cent bond be is
sued further disturbances in the Sc
curity market would probably result.
My preference would be to see
per cent bond issued ut par, and I
believe the people of the United
States would absorb the issue. / also
believe they would buy these bonds
more readily if there were fewer
technical differences in the various
issues, which create discussion, waste
time and effort and create misunder-
standings. Government bonds are
bought from patriotic motives and not
as matter Of investment niceties.
If necessary, l would rather see a
per cent bond sold at discount than
AZ per cent bond sold at par. 1t
seems most wise for the government
to issue short time certificates of in
dcbtedncss for large amounts in an
ticipation Of bond issues, and to make
this year one great issue rather than
several small ones.
1t seems better to continue selling
the short-time certificates Of in
than to investors direct, as the banks
are vitality interested in seeing tax
funds withdrawn during long period
rather than have great concentra-
ton of payments in June. Many
banks have already advised their GUS
toners to invest in such certificates
We arc constantly buying them for
account of the large taxpayers among
our clients, in addition to buying
them for ourselves.
Opposes Selling
Bonds at Discount
John G. Lonsdale, president OF
the National Bank of Commerce, ir
st. Louis, opposed any increase III
the interest rate:
do not favor advancing the in
terest rate for the third Liberty
Loan to AZ per cent. am aware
that some concession must be made
in order to enable these bonds to be
sold, but l believe this should be in
the nature of tax exemption or that
the securities should run only two
to five years. l believe that steps can
be taken that will prevent any marked
decline in the market price of per
cent bonds after the campaign is
over.
am in favor Of selling short-timc
securities direct to investors as wei,
as to banks. 1t is becoming more and
more difficult for private and cor
porate enterprises to sell their Sc
curities; in fact, the market for
longtime issues is practically closed
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1918-02-10
TO QUESTION considered by

TO QUESTION considered by
~ American fnanciers since
the world war began has
been more difficult to answer than
what is the proper interest rate to
be named by the government for the
next Liberty Loan. The Treasury is
confronted by the fact that its per
cent bonds, put out last October, are
selling virtually at AZ per cent
basis; that the Forthcoming loan
must be much larger than either of
the others, since the government is
under the necessity Of raising from
eight to ten billions by June
80 next, and that a decision to adj
vance the interest rate to AZ or 4 Il
per cent would automatically put up
the interest rate on the first and
second Liberty loans, thereby add
ing largely to the cost of financing
the war. 1t is recognized also that
such action would influence all fut-
ure borrowings for war purposes and
cause readjustment in security
prices.
The situation, therefore, is utterly
unprecedented and of interest to
every borrower in the United States,
since any rise in the interest rate on
United States securities has direct
bearing upon the cost of similar ac-
commodation to private corporations
and individuals. If the government
has to pay, say, 41a per cent for a
loan offered in March as against 4
per cent for a loan marketed flve
months before, it means, other things
being equal, that the cost OF all lend
ing operations has materially IN
creased.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1918-02-10
Bankers Asked
For Suggestions

The Secretary of the Treasury, be-
ing deeply interested in financing the
war OUTLAWS with per cent loans, II
possible, lately let it be known that
he would welcome suggestions from
bankers of the large reserve centres
concerning the best way of handling
the next loan. Some very interesting
letters have been sent to Mr.. McAdoo'
the desire of bankers everywhere
being to keep the interest rate on
government loans as low IS possible,
so as not to further increase the cost
of doing business, which would IN
ev;tably follow if the charge TOR
mercantile accommodation should be
raised following an advance IN the
interest rate on war borrowings.
Annreciating the necessity of RETAIN
ing the a per cent interest rate II
nossible, Secretary McAdoo, III MS
annual report, says fatty that it
NAV be better for the people to IN
crease taxes than to raise the inter-
est rate on government loans. ne
puts it bluntly:
IF situation should develop where
the government could not sell con-
vertible and partly tax-exempt bonds
upon per cent basis, 1t would,
believe, become necessary to serious
lv consider further revenue iegisla-
ton. In my judgment, an increase
in the rate of interest on such bonds
would be extremely unwise and hurt
full. The higher the rate on govern
ment bonds, the greater the cost to
the American people of carrying on
the war and the greater will be the
depreciation in all other forms of in
vestment securities. We cannot re-
gard without concern, serious de-
clines in the general value of fixed
Investments. 1t should be the ear
nest endeavor of every one to prevent
this, and l earnestly hope that the
processes of education and of unset
fish consideration of the problem
from the standpoint of general inter
est will provide the necessary
remedy"
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1918-02-10

to make loans to savings banks upon
the security of the bonds held by
them. Since the corporation is per-
mitted to create and issue notes up
to four billion dollars, which shall
be available for rediscount by the
Federal Reserve banks, the question
is whether the savings banks which
have recourse to this great source
of supply may not be able to make
larger bond investments because Of
this possible assistance. AS it is, the
savings banks managers have been
fearful of tying up too much money
in the new war loans. Should the
War Finance Corporation obtain le-
gal existence Immediately, however,
the indications are that the savings
banks would be able to fall back
upon it's facilities to an extent
which would enable them to make
larger purchases of government Sc
curities in the future than they have
in the past. 1t is worth noting, also,
that the proposed corporation has
the right to subscribe for and to
deal in government bonds.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1918-02-10

AFOiU OUijI
THE QUESTION whether it is
expedient to introduce Chi
nese or Japanese labor in
vast numbers into "white" countries.
"for the period of the war only"
seems now to be in vogue in many
parts Of the world. In Australia no
agitation in favor of such a proceed
ing is likely to make great Roadway,
for in that country they have long
since decided fatty that they will
have nothing but "white Aus
tralia," whether they ever succeed in
getting large population or not.
There has been, it is true, some little
talk of opening up the "Northern
Territory" tremendous undevel-
oped tract, to Orientals, at the same
time preventing them from CROSSING
into the older and more settled por-
tons. At present they are admitted
to Australia only upon payment of
an almost prohibltive head tax. Yet
many Canton Chinese have paid this
tax, have come in, and have captured
most of the small produce business
around Sydney, driving out white
competitors.
The chief arguments against ad-
hitting other than Western Euro
peans and Americans seems to be
that, once in, they will breed alarm
lngly, even to a greater degree than
has been experienced in countries
that have admitted southern and
eastern Europeans in hordes. There
is the additional grave danger OF
promiscuous miscegenation. Aus
tralians, who have stubbornly main
tanned a slowly growing country
principally of British stock, may
perhaps be prone to magnify the
dangers that might result from mix
ing of the various races. Then.
again, perhaps they are entirely
right. Rapid growth is not every
thing. There is a tree in Hawaii
that takes root wherever the limbs
touch the ground-and they are al
ways touching-but this tree is not
to be compared to the oak!
10 understand such serious
question one must devote considera-
BILE study and thought to the econ
omic situation in the Far East,
rather than accept trustingly the
opinions of those who speak as Eau
rhorities."
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1918-02-10

part of employers hungry for labor
or on the part Of really hungry
laborcrs, who are sometimes led by
glowing offers to sign themselves
away. Of course, if the very exist
ence of any nation is pivoted upor
the question of bringing indentured
men in hordes to it's shores, then by
all means let the nation itself bring
them in forthwith; but in the name
of liberty and love Of country" let
no andiridual gain one cent thereby.
The South African disgrace stands
as a record for all time to make ali
men think whether they care to as
sumo the dreadful responsibility that
accompanies wholesale Importation
Of men without families. | say that
.aborers Of any race-herded and
driven into strange lands, without
the humanizing influences of their
families to hold them in check-em-
phatically do not, and common, make
for ultimate human progression in
the long run, whatever may be sale
in eXtenuation on the grounds of
necessity" Too many deeds,
think, have been done through me
cessity."
The Australians have doubtless
pictured in their minds the revolving
South African story, and will have
zone of it in their isolated but for
tunate country.
There is, am aware, no point of
comparison between the Chinese or
Japanese coolie, or unskilled laborer
ind the skilled workman. The con-
tition Of the coolie is almost hope
ess. But take sixty thousand of
either kind from their beloved soil,
away from the influences of fila;
oiety, herd them in Storage quarters,
transport them to the uttermost ends
Of the earth, crowd them into COM
pounds or quarters" under native
oosses-arrogant in their petty au-
hority-all these under Caucasian
head masters who are just ignorant
enough to consider the S'yaller man."
the "Chink" and the Gap" as less
than Humankind such situation
will develop as will not be to the
lasting credit of the promoters.
Japanese Is a
Family Man
The Japanese is essentially fam
lily man. His average qualities are,
1T appears to me, equal to those OF
any race living under like environ
ment. Wherever he has been grant
ed freedom to expand-as he has
Under American influence in Hawaii,
With his beloved family growing
around him every day-he has be-
come an economic factor such as the
world must reckon with. To-day, in
Hawaii, there are estimated to be
more than 100000 Japanese, out Of
total population of 100000. In
1860 there were $1,000 Hawaiians
and only 2,7S6 foreigners of all
aces. Out of a total in 1917 of
.6,695 plantation laborers 25.449
we're Japanese, and there were but 2
handful of Americans-only 73O
The latter cannot compete. Their
wants" are double. japanese births
1917 We're Alp; deaths only
,246. American births were 285 and
leaths 141.
The Japanese thrive, and if one
'orgets prejudice for a moment he
nay think that, after all, they have
right to prosper, for they are quite
as industrious, as frugal and as
'tudious as were the more nearly
white races when they had little
wealth and when men and women
worked like horses. Less efficient
competitors have, it is true, depre.
clated the "Japs," but the Jealous
criticism has not hindered their ex-
J panslon in the least wherever they