Evening star., 1918-02-24
BY I. A. FLEMING.

Bankers are giving much considers
ton to the problems connected with
the fotation Of the third liberty loan.
They hope that the increase in the rate
Of Treasury certificates to ~ per cent
does not indicate determination on
the part Of the Secretary of the Treas
ury to advocate like rate for the next
block OF bonds.
The president Of one Of the leading
local national banks, commenting on
the subject, made this statement:
cit seems to me that it would be more
or less of serious proposition should
it be necessary to increase the rate on
the next loan. It would mean that there
would have to be an increase Of l per
cent on the $500, ,00O, 900. more or less,
81 per cents that are still outstanding.
Then one-half Of i per cent increase
on the 0s,756,o0o Of the second IS.
and also on the converted first IS,
which would make the government pay
something over 5 per cent for its
money.
Then. again. the trouble and expense
incident to further conversion of the
total outstanding liberty bonds into the
higher rate would be another serious
matter.
with a government AZ per cent is
sue Of bonds on the market 1t would
be next to impossible to conduct other
financial operations, savings banks
would find it difficult to maintain de-
posits and mercantile credits would
naturally be restricted.
lone trouble with the market for lib
erty bonds is found in the disposition
of the small investor to get out Of his
holdings just as soon as the enthusiasm
has worn off and the display of the
button has satisfied his vanity. As
rule, very little time elapses between
the initial payments and the initial
movement to cash in on his savings;
often the first payment is the last.
Many of them may have been forced
by necessity to get out. but the dispo-
sition to make sacrifice. the need OF
making it, has not been shown or rec
ognized. AS real matter Of fact few
actual sacrifices have been made in
the daily life Of Americans other than
of the soldiers.
How is a higher rate Of interest
going to be avoided? It certainly does
not look as If a 4 per cent bond could
be successfully f1oated at this time.
But a 4 per cent. even a 3.65 per cent,
aoated; If per cent, then make them
redeemable after five or ten years, at
the option OF the government, when
they might easily be refunded IL con-
ditions are improved, as they probably
will be-
Pushing the Certificates.
The Secretary of the Treasury gives
full credit to the banks Of the east for
doing their full share in the purchase
Of Treasury certificates. but admits that
there are laggards in other parts of
the country. That the banks of the
nation, with few exceptions, have been
back of the government in all war financ-
ing goes without further comment.
Recalling the last liberty loan it is
interesting to note that the subscrip-
federal reserve system showed an ex-
cess over expectations. as follows; Bos-
ton. SO per cent; New York, 70 per cent: :
Philadelphia, 81 per cent; Cleveland, So
per cent; Richmond. IS per cent; At
lanta, 13 per cent; Chicago, 80 per cent; F.;
st. Louis, "a per cent: Minneapolis, "a
per cent; Kansas City, 25 per cent;
Dallas, 4 per cent. and San Francisco,
80 per cent. These figures are interest
ing.
It is unfortunate that the banks have
of the burden, but it is made relatively
easy for them through the privileges
of rediscount of the reserve banks.
Treasury certificates are being used
to postpone the issue of bonds until a
more favorable time. and banks and
corporations should get back of the
issue to the limit II necessary. the
rate will be advanced to a point where
the public will pull cash out of banks
erty loan committeeman puts it.
Consultation Tomorrow.
Washington local liberty loan com
mittee, John Poole, B. F. Saul, Corcoran
L