New-York tribune., 1918-07-04

In Canada Victory bonds. issued
at 9S66, are selling at 991A. Until
the middle of June the price had
been fixed at 9S7s, but the demand
was so keen that buyers far out
numbered sellers, and it was found
necessary to advance the price near
ly a full point above that at which
they were issued in order to estab-
lish a better balance between supply
and demand. On the New York
Stock Exchange Liberty A As are
selling at discount of more than 5
points, while the first and second as
are about points below par On
every little wave of selling prices
recede further 1t is striking con-
trast and one from which lesson
might we'll be drawn by this coun-
try.
The disparities are not to be ac-
counted for by the differences in the
bulk of United States and Dominion
loans, for in proportion to popula-
ton and liquid wealth Canadians
have bought bonds quite as freely
as the people of this country. The
explanation is rather tnat Canada
has adopted an effective plan for
stabilizing her war bonds-has,
moreover, made the operation
profitable directly, in a small way,
and indirectly to a far greater eX-
tent. She has done it simply by de-
veloping a continuous demand for
the bonds.
1t is frequently said that Liberty
bonds sell at discount because the
demand for them is fully satisfied
during the loan campaigns. That is
true in a sense, but Canada's ex
perience suggests that it is only the
actiue demand that is supplied, and
that there is a latent demand which,
If properly developed, may be count
ed on to absorb all the bonds that
nay come on the market, and so in
sure maintenance of the price at OR
close to par.
Under the Canadian plan the
bonds are not listed on the stock
exchanges, only to find a false level
established on sales of an absurdly
small fraction Of the total. All pur
chases and sales are made through
Victory Loan Committee appoint
ed by the government. This COM
mittee has three subcommittee,
with headquarters in Montreal, To-
ronto and Manitoba. Its business
is to see that the price is sustained,
while at the same time providing a
ready market for all who, thro ugh
necessity-and there is no other
valid excuse for selling Victory or
Liberty bonds-must sell.
In the beginning the cooperation
of every investment house in the
Dominion was enlisted, first because
their services were required, and
second because the Dominion recog-
nized the wisdom Of protecting them
in some way after practically de-
stroying their business by absorbing
all or nearly all investment funds.
Without a single exception these
houses signed an agreement-and
they have lived up to it strictly
binding themselves to effect no
transact{ons in the bonds except
through the committees. Their com
pensation was fixed at 1 per cent
seemingly a very liberal figure. But
this commission is paid only to the
broker who produces a buyer fo1
the bonds; the one who acts for the
seller gets nothing whatever. The
brokers thus have every inducement
to create demand for the bonds
between loan campaigns, and at the
commission named they can afforo
to do so. They can keep their sales
men on the road seeking out Gus.
toners and spreading propaganda
that helps to insure success Of the
succeeding issues. incidentally they
are enabled in some measure to
make up for the losses sustained
through the drying up of the invest
ment business, upon which they nor
mally depend.
All this is done at no expense to
the government, for the plan in
cludes feature which has not only
provided funds for the payment OF
commissions and the expenses Of
the committees, but has built up q
comfortable surplus that eventually
will find it's way into the Dominion
treasury. Whenever a large block
of bonds is offered for sale the com
mittee waits upon the prospective
seller and informs him that it will
take the bonds at the fixed price, il
given time in which to dispose OF
them, but if the sale must be made
Immediately it will have to be at &
I