The Washington herald., 1918-02-21
LIBERTY BONDS
L NOT UNIFORM
Holland Advises Same Rules
s Should Govern Taxes
and Interest.

BUSINESS man who Is associated
with one of the large mercantile
houses and who has had long and
valuable experiences in business af-
fairs. that IL would be worth while
IL he were to convert . 1-2 per cent
liberty bonds into per cent bonds,
being tempted by the additional in
terest Of Ia OF per cent. The
amount OF the bonds he owned was
less than $1,000. He asked broker
who is OF excellent reputation, in
what way the 31-3 per cent bonds
could be most conveniently con-
verted into 4 per cent bonds. In
reply the broker said that he would
sell the . 1-2 per cent bonds and
with the money received would buy
4 per cent bonds. Two days later
the business man received not only
the per cent bonds which were of
the denomination of his 1-2 per
cent bonds but in addition a check
for nearly $40. There was also a
statement of accounts made by the
broker. That seemed an extraor-
dinary transaction to the business
man He was able, as he said. to
sell bonds bearing a rate of in
terest of 31-2 per cent and with
the money thus received to buy
bonds of like denomination bearing
a higher rate OF interest and in
Henition receive a check for nearly
$50.
He was. Of course. gratified.
nevertheless the details OF the trans
sciion puzzled him He sought an
explanation and the broker said that
L. per cent bonds are not liable
10 any taxation white the per
cent bonds are. IL any one person
owns more than $4,000 of the
per cent. Men Of capital. who were
seeking investments, were Deem
ing II the wiser part to buy 3 Tie
per cent bonds and for that reason
the market quotations for the 3
1-2 per cent were higher than the
market quotations for the bonds
which brought a higher rate OF in
terest.
Differences Puzzle Many.
There is probably no broker of
good reputation and considerable
business experience who has not
had an experience OF this kind re-
Gently. And these experiences in
the aggregate have suggested to
some OF the bankers and men of
finance that hereafter the govern
Inent so provide for the marketing
of bonds that there would be per-
feet uniformity. for otherwise one
issue OF bonds might show that the
governments credit was deprecated
ir comparison with the credit which
was represented by the market quo
tatfons for another series of bonds.
This wholly unexpected situation
i< understood to have caused Secre-
taTy McAdOo to give careful consid-
Grafton to the method which here
after should be adopted by the gov
Crnment when seeking to borrow
billions Of dollars from the Amerl-
can people. One of the cOnsidera-
tions is this: Is it the better part
to Fetain the taxation feature now
contained in the present issue OF 4
per cent bonds in future issues and
TO offer the bonds at IL rate of 1-2
per cent: For there appears to be
a gradually but steadily growing
opinion that il Secretary McAdoo is
to place a new loan Of at least six
biHdOns with the American people
Hcsmust do one OF two things. He
mJIst either obtain from Congress
authority to float these bonds on a
!I-e per cent basis with the taxa
tion feature retained or else he must
Ger the bonds at per cent free
from taxes.
Furthermore the Secretary has
undoubtedly been informed that
growing opinion among the bank
erS especially that great group of
national bankers upon whom he is
to rely for the marketing of
some s3.OOO.OOO.OO 900 of Treasury
certificates. appears to be that
hereafter there should be per-
feet uniformity in the various
issues so far as terms are
concerned and also that it may be
the better part to offer these bonds
in fnstallments. That is. however.
from one point OF view, substa ntial-
ly what Secretary McAdoo is now
doing. for the Treasury certificates
which he is selling at the rate of
S5Od.OOO. 900 every two weeks, real
ly represent installment payments
upon the issue of liberty bonds
which is to be made in April.
There is no question about the
ability of the American people to
meet any conceivable appeals which
the Secretary may make for sub
scriptions to the new loan. But
there is some question about the
method by which the people should
be approached. Many think that it
will be impossible to carry on such
a campaign. almost like a nation
wide epidemic CT hysteria. as char
acterized the second floating of lib
erty. bonds
That the wealth Of the country is
increasing rapidly enough to pro-
vide all the capital which is needed
Is demonstrated not only by the
magnitude of the money value of
the agricultural products Of 1917
inclpding meat, which Is approxi-
uately twenty billions-but also by
the almost inconceivably great in
ternational trade OF the United
states in 1917. OF course a part of
the enormous money value of this
export trade represents the high
prices for commodities and also the
demand Of the allies for American
commodities, both munitions ard
food. But this does not thoroughly
explain the unparalleled figures
which tell in dollars what our ex
port trade In 1917 was. There was
q gain Of nearly seven hundred and
nifty million dollars over our exports
of 1915. The December shipments
alone were the greatest in any one
month since the government was
established. with one exception.
The total shipments cleared from
American ports to foreign ports was
much greater than in 1915. notwith-
standing the menace OF the subma-
rfnes and Of mines. We exported to
the countries OF the Western henlis-
phere. especially Latin America, a