New-York tribune., 1918-01-26

Speaking Of plans for the next
Liberty loan a banker, returning
from Washington, remarked that
discussion was in the initial stage
The blood of those who have the
controlling voice IN national finance
is just beginning to get chilled" he
said. BY which was meant that
Washington is commencing dimly to
perceive that distribution of the i'm
pending loan is likely to be much
more difficult than was the flotation
of either of the two preceding issues.
The loan will have two great advan-
tages-tirst, the people now have a
much keener realization of what the
war means, and, second, the educa-
tional work already done will be of
immense value. Ten million people
now understand the mechanism of
investment who were densely igno-
rant of it q year ago. But against
these advantages are several un-
favorable factors. There is the
problem Of bulk. The amount to be
offered for subscription will, in all
probability, not be less than S6,000,-
100000, and may be much more. To
distribute a loan of that size-not
merely to sell it, regardless of where
it finds Judgement, which is simple
= much greater proportion of the
population must be reached. Instead
Of ten million subscribers, there
must be, let US say, fifteen million,
and each must do his full share.
Now, it happens that conditions
make this an extremely difficult
task. 1t is by no means impossible,
but no good can come from the no.
ton that it is going to be easy. Sell
ing bonds to the wage-earner has
been made harder by the fact that
the industrial shutdown and disor-
ganization attending the fuel crisis
have seriously decreased the invest
ing power of the individual. This
will not only make it more difficult
to get new subscribers, but to induce
those who have bought earlier loans
to participate as fully as they
should, for the reason that many of
them will have been unable to COM
plete payments on previous pur-
chases as soon as had been antici-
pated. Moreover, for similar rea-
sons, business concerns, great and
small, may be unable to buy as free
ly as in the past. In view of the
present situation, it is not impossi-
bic that the railroads, which bought
large blocks of the last loan, will
have to restrict their commitments.
Then, zoo, corporations and individ-
uals preparing to meet the income
tax, may not be able to take as much
as they would under other circum-
stances.
There is, therefore, more than a
possibility that the banks may haye
10 take larger share of the issue
than is desirable. Bearing in mind
that possibility, it is the opinion of
some of the most able fnanciers in
the country that a radical departure
in respect to the character of the
bonds to be offered should be made.
Instead Of a long-term loan, they are
convinced that the government
would find it profitable to put out
bonds maturing within a relatively
short period, say, five years. There
are certainly enough advantages in
herent in this proposal to warrant
the most serious consideration by
the Treasury Department. In the
first place, it would give the banks
much more liquid security; one in
which their funds would not be tied
up for what, in the view Of the bank
er, is an unlimited period The
banker must have reasonably fluid
assets, and long-term bonds do not
come within that classification where
the banker is under moral obligation
to refrain from forcing them on the
market, as he can do in the case of
other securities. For like reasons, a
short loan undoubtedly would ap-
peal to investors who want to be in
a position to take advantage Of in
vestment opportunities when the
war is over. That is evident from
the fact that for long time it has
been extremely difficult to sell anv
new securities other than short-term
notes, for which the demand has
been fairly strong. Moreover, there
IS the great advantage to all con-
cerned that a five-year bond could
ret 90 much below par, for the rea-
son that relatively slight decline
would produce large increase in
yield The value of price stability
IN this case is tremendous; witness
the dissatisfaction engendered bv
the fact that the last issue is selling
at a discount OF approximately 4