The Bridgeport times and evening farmer. (Bridgeport, Conn.) 1918-1924, 1918-01-04
LIBERTY BOND
LESSONS
THE MARKET PLACE
By HOWARD SPEER
OF Hincks Bros. s. Co.
NO. 2S

If you have read the last two less
ons you may perhaps have better
understanding of the fact that all
things change in price, not even ex-
cepting money, and that sometimes
the price on a given article may be
higher and sometimes lower than the
figure you paid for it.
But for all that you may still be
puzzled to know why the price on
Liberty Bonds should go down so soon
after they were issued, particularly
since they were SO largely oversub-
scribed. Prices change, of course,
but why should they change on this
particular article at this time. If it
was worth 100 cents on the dollar
when it was first issued why isn't it
worth just as much now? A Lib
erty Bond is a promise Of the United
States to pay full face value, and you
think the United Suites ought to
keep its promise.
Yes, you are right. A Liberty
Bond is a promise to pay and the
United States will keep it's promise.
But read your bond and you will find
that so far as the United States is
concerned it is a promise to pay in
1947 or 1912. If it were a promise to
| pay on demand it would be money
| and you can readily see that the gov
eminent would be doing very silly
lion dollars worth of money for an
other five billion dollars worth of
| money! Why bother to make the ex-
change? Why not just keep the first
five billion if one lot is to, be exactly
like the other?
The big difference, therefore, be-
tween money and Liberty Bonds is
that the one is payable by the gov
eminent on demand Of the owner and
the other is payable at some future
| date.
In this respect a Liberty Bond is
| just like any other bord. When a
railroad or an electric light company
| or a city needs a large sum of money
to make extensive improvements it
is frequently forced to borrow the
money because it simply does not
have such large sums in its treas
ury. 1t, therefore, engraves a num-
Der of pieces of paper in each of
which it promises to pay to the owner
a certain sum of money at some flu
tUre date, and also agrees to pay in
| terest on that sum every six months.
| Then it sells these promises to the
| public. The public buys them be-
cause it has faith in the ability of the
company or city to pay the debt and
because it thinks the interest rate is
attractive.
Now after these bonds or promises
have been sold they become the prop
erty of the buyers. The company
that issued them has nothing more to
do with them until they become due,
except that, of course, it must pay
the interest regularly. If you buy
one of those bonds and little later
find that you need some money, you
must not look to the company to pay
you back your money. You must
sell your bond to somebody else. It
is generally very easy to sell a good
bond for there are markets for bonds
in the principal cities just as there
are markets for beef, and eggs, and
wheat, and silk, and wool But the
| important thing to remember is that
!
kets and that you cannot expect the
company that issued it to buy ii
back.
Now, Liberty Bonds are exactly like
other bonds except that they are
safer. The United States government
is the company that issues them nd
they are, therefore, sure to be paid
when they come due. But in the
meantime remember that the govern
ment has nothing more to do with
them until they fall due, except thai
it must pay the interest every si1
months. If you want to sch you
must find someone who wants to buy
1t is easy enough to do that because
but the matter of price is something
that is changing daily, yes, almos
every five minutes.
Why? Well, here are some of the
reasons:
Mr.. A is a very rich man. He
bought 100000 worth of Libert!
Bonds. A week ago one of his bis
factories burned to the ground. HI
must rebuild Immediately and mus
have a large amount of ready money
He decides to sell all his Libert!
Bonds and offers them at their face
value. But nobody wants so man,
bonds just at that moment. In or
der to sell them quickly he offer
them at a lower price and somebod,
buys them. That makes one prize
change.
Mr.. B. is another rich man. H
has just made $4,000 unexpectedly
He decides to buy Liberty Bonds. No
body has that many for sale at tn
moment at the price he will pay. H
offers a higher price and that bring
out some bonds. Price change Nc
2.
Mrs. C. is a poor widow whose hus
band has just died and left her $50
life insurance. Her friends tell he
7 to put it in Liberty Bonds. She find
+ there are plenty of $1,000 bonds TO
sale, but no $500 pieces. She offer
a tride higher price and succeeds il
Y getting one. Price change No. 8.
Mrs. E. is a wealthy widow wit
very extravagant tastes and very gen
| erous instincts. She spends her entir
income every year either on hersel
| or on others. This year she lind
Y she must change her investments i
! order to increase her income. Sh
sells her Liberty Bonds for what sh
can get for them and buys othe
I things not so safe, but that pay
higher interest. Price change No. I
Mr.. F. is a Spectator in cotton an
grain. He is in the midst of hi
deal when suddenly something hap
pens to the wheat market and h
needs a large sum of money at one
, to save himself from disaster H