The Washington herald., 1918-11-23
NJ ADOO PLANS
USE FOR BONDS
Secretary fday Propose Big
Foreign Securities Deal,
Says Holland.

Some of the ablest men of finance,
several of them having had long ex-
perience, find themselves wondering
whether, tucked away somewhere in
the back of Secretary McAdoo's mind,
there may not be the germ of a prop
osition, which, IL IL develops, will be
ranked among the greatest of all
financial achievements. II is also, to
some extent. a political proposition
and IL. will involve, II the Secretary
finds IL worth while to advocate the
plan. favorable action by Congress.
Probably before the end of Presi-
dent Wilson's second term. European
nations which have borrowed already
IS, 600, 10000 from the Federal govern
ment, will have taken up the notes
which they have given in acknowledge
ment of the obligation. these notes
being demand notes. and have subsd-
tuted for them government bonds. Mr..
McAdoo. as Secretary OF the Treas
ury. will. IL this stupendous trsnsac-
ton is completed in the next two
years, have as custodian in his pos
session certainly as much as S 900 oo0
900 and possibly billion or two more
Of bonds issued y England. France
and Italy. Unless by legislation some
action is taken whereby these bonds
may be utilized by the government
they will remain in the Treasury until
paid. and each year the interest these
bonds carry will be paid to the United
States, the aggregate OF which may
be as much as $500. 900, 900. Men Of
great financial ability, as well as the
politicians who are consummate mas
ters of the art, need only a few Incl
dental, apparently trivial incidents or
circumstances, upon which to base
opinions. For that reason il has been
surmised that Secretary McAdoo is
now wondering whether the day may
not come during his administration Of
the Treasury Department when he
may deem it the best policy to ask
Congress to enact legislation which
VIII make possible for him to utilize
the foreign government bonds for a
purpose in which will Iurk an issue
which the people of the United States
must decide at election.
surpasses Morgan Plan.
This plan inchoate, as il now seems
TO be, nevertheless involves A piece
of financing far exceeding anything
which the late J. p. Morgan contem-
plated. eight times greater than the
plan which he perfected that made it
possible to create the so-called bill
lion dollar United States Steel Cor
pOration.
There is no good reason why. from
the financial point of view. these for
eign government bonds may not be
utilized to back OF support an issue
by the Federal government OF a like
amount of bonds or whatever amount
may be deemed eXpedient But what
is to be done with these bonds IL they
be permitted by action of Congress?
1t is suspected that occasionally there
floats through Mr.. McAdoo's mind Ia
mind which we all now know is cap
able of grasping stupendous financial
subjects. and mastering them to the
utmost detaiD the proposition that
these Federal government bonds, be
hind which will stand as security the
bonds issued by the European gov
ernments, be used to buy in the name
of the government the stock, now held
by citizens and corporations OF the
American raih Dads. 1t might in part
be used also to liquidate some of the
permanent obligations of the railroads.
1t may prove to be sufficient TO pay
the stockholders in American rail-
roads for their shares OF stock. Fur
thermore IT might be so utilized as
to enable the government without in
any manner taxing the people lex
cept. of course that kind of popular
support which subscriptions to lih-
erty bonds and the taxes represent
to buy also the stock of the tele-
phone and telegraph companies.
Men who are OF great authority in
the world Of finance speak of the
proposition as one that might COM
mend itself to the American people