The sun., 1918-09-09

during the period OF heavy Treasury
financing.
The Next War Loan.
The setting Is right for the beginning
Of the fourth Liberty Loan canvass and
the probability 10 that the intensive
of three weeks will DO moro
productive than any previous campaign
Of four weeks. The country knows what
It Is fighting for and the people may be
trusted to do every thing possible to
make the forthcoming Government loan
in every sense victory loan.
During the last canvass subscriptions
for $4,176.516.S5o bonds were received,
17& per cent. OF which came from for
eisn born American citizens. The prob
ability Is that the response from these
classes will be even larger in this in
stance, since tho new draft law has
brought a great many new people into
the war enterprise. while the reassur-
ing news from the front has affected
sentiment in remarkable way.
Until the Treasury announces the de-
tails Of the loan 1t will not be known
just what special inducement, tho Gov
eminent holds out to insure tho success
OF the record issue. As a straight-out
investment proposition q ~ per cent
loan only partially tax exempt and with
out a valuable conversion feature would
not be attractive enough to insure the
instant success Of a $4,000, o0o, 900 issue.
But Secretary McAdoo and his advis-
ers are rcsourceful enough to make a
AZ per cent loan attractive by making
tho tax exempt feature more generous.
or by including some provision not pre-
scented in any OF the previous issues.
The Treasury experts appreciate the I'M
portance Of making the loan go through
with a rush and in obtaining so far as
possible a house to house distribution CT
the bonds.
Only per cent. of the total amount of
the bonds issued by the Government dur
ing tho course OF the present war were
held at the close OF June by national
banks as Investments The banks were
then carrying only s457,oo0,oo of the
bonds. or 2.2s per cent of their resources
in loans secured by these bonds.
Placing the Bonds with Investors.
So far. therefore, the banks have been
very successful In passing the loans on
to tho people. These Government loan
sales have been splenddly handled and
because OF the more perfect organiza.
ton the probability is that the forth
coming issue will be more widely dis
tributed than any Of the others.
If the war should last a year or two
the Government might have to consider
the advisability of making continuous
offerings of short term loans in order tt
attract the public This system ha.
been highly successful IN Great Britain
where the war outlays are being largely
financed through successive sales o.
short term Treasury obligations.
The interest rate Is trifle higher. but
the markets are saved the strain incident
| to O nation wide canvass to put through
tremendous loan in a short space o.
time. We have not resorted to temporary
| financing in the same way and nearly
all of the 81, 900. 100000 OF Treasury GER
tificates outstanding in this market are
! held by banks and investment institu
| tions
| With the sale OF the Government bond.
| and Treasury certificates the work o
! financing the crops and the immens,
corporation requirements. the next foul
months in the money market are likel.
| to witness some extraordinary develop
ments. The bank position has been vel
fortified by large gold reserve and b!
| rigid adherence to the provisions of tn,
law governing the eligibility of pape
available for rediscount at the Fedora
| Reserve banks. The Federal Reserv
Board has exerted oil Its influence t,
get the member banks to keep themselve
as liquid as possible and TO confine thei
loans to commercial paper Issued 70
essential purposes.
The development of the acceptanc
system has given the banks an additiona
supply of liquid paper in which to In
vest. The banks generally have bee,
careful to avoid fixed investments an
have declined very attractive rates of
fered for large loans by promoters o
speculative enterprises. The result
that banking conditions are sound an
the Government can be accommodate
with the largest loans ever applied TO
in this country.
The Public Utilities.
Various communities have granted ad
vances to street railway companies tina
have been hard hit by the readjustmen
forced upon them by war condition:
More than one-quarter OF the urban pop
ulation of the United States and Canad
is now paying more than the traditions
fve cent fare. This relief work must b
ror cd fnrthar hnuaVnr ~ tha of
railway companies are to be saved fror
receiveship.
oeveral large corporations are In
bad way. being forced to advance wage
and without the means OF increasin
fares or financing their proper require
ments. The War Finance Corporate
has come to the rescue OF some of thes
companies, but a more ambitious schen
of relief must be undertaken IL the nee
essary assistance is to be given.
In view of the conservative policy pul
sued by the directors otthe War FinanC
Corporation. the violent criticism whIc
; greeted the proposal to form this reli,
organization Is interesting to recall. IL
stead of becoming an instrument Of dai
gerous imitation, the corporation has q!
sumed virtually the role Of rediscoun
ing institution, combining its Investment
for the most part to paper. containing
banks guarantee. This action Is Il
more significant. wien It is remembers
that the law gives the corporation Il
right to make direct loans in specific Il
stances. But the directors have resistt
all entreaties to have them resort to tn
form of direct lending. except In urge
relief cases.
1t Is evident. however, that this gree
relief agency will be Of service in he'll