New-York tribune., 1918-03-10
Premium Bond Plan
A Frank Appeal
To Baser Instincts
British Financial Authority Saw,
1t Would Cultivate the
Gambling Spirit
{From The Economic Wora)


to find an easier and more products,
method of providing the great suus
necessary to finance the war has pivsn
rise to in England during the last 81,
months Or so the so-called "premiun
bond" scheme has come in for rooa
deal of attention on the part of ce,.
tain class of somewhat loose think;ns
persons. This scheme is an adaptation
of the familiar French plan of bond
issue with a kind of lottery attachmen.
AS has been said, certain persons in
Great Britain have been urging of lata
that this plan should be tried upon thu
British public to the end that the mas,
of the population should be induced N
subscribe more freely to The war loan,
and that the intere. rate upon furthe,
war loans should be sharply reduced
from the rates which the government
has been offering during the last two
ycaHS. IL cannot D. SAID IN It the schema
has found much favor with the British
governmental authorities. and it ha,
certainly been treated with the greatest
disfavor by the more serious minded
DuUllC lIlSU anu lllldUCltIS Oh Great
! Britain. At the same time, it has been
the subject matter Of widespread dis
cussion, and opinions pro and con hava
been rather numerously expressed. In
fact, the project was brought TO the 1t.
tention of the Government Select Com.
mittee on ways and means of financing
the war-which body pronounced EN-.
phatically against it.
An interesting example of the opn.
ions eXpressed-in this case, thorough.
| ly hostile-has just come to hand in
the form of, a statement from we'll
known British financial authority, Sir
Robert NJ. Kindersley, who is reported
as saying:
"The advocates of premium bonds
argue that to buy a premium bond is
not gambling, because the purchaser
can never lose his capital. This argu.
ment is hardly convincing when a Ger.
tain portion of his yearly interest is to
b. used for pure lottery. What they
in fact, say is this: If you will inves.
your money in certain government Sc
curity, we will give you leave to sub
scribe a portion of your interest each
year to an out-and- -outgovernment lot
terry.
"The investor not subject to income
tax can to-day-by investment in ma.
tional war bonds-obtain 5 per cent III
terest for ten years and s5 bonus at
the end of that time, total roughly,
of e55 for each 500 invested. An in
vestment Of f100 in a ten-year premium
bond bearing 212 per cent only THE
rate usually suggested) produces only
f25 interest and no premium, SO that
an investor will be $50 per 500 worse off
at the end of ten years compared with
the investor in war bonds. He Will,
however, have received a license to
spend this $50 in a state lottery. 1t
is immaterial whether you call tbs
sum interest or capital; the fact re-.
mains that if he does not win prize
he loses the whole amount.
The Real Appeal
"But apart from the specious excuse
that no gamble is involved in the issue
OF premium bonds, let US examine the
real basis of the appeal. Is it to patri'
otsm? Is it to the wise provision .or
old age or sickness? Is it TO seif-ds-
nial for the sake of those we have sent
to fight for us? Is it to steady, con.
tinaous effort to help to win the war;
Surely it is to none Of these All these
appeals have been made continuously
since the war began, and with large
measure of success. The appeal OF the
premium bond is frankly to the baser
instinct of cupidity-to the desire 70
'get-rich- quick y-without-etfort.' It,, II IS
suggested that the state should dehD-
erately play upon and cultivate what IS
we'll known to be weakness Of human
nature-a weakness which has proDa..
bly, wrought TO mankind more mlschleI
In the economic sphere than aiiHos'
any other failing.
The appeal is the very negatlon OF
the spirit of steady and persistent IN.
dividual effort, and is PIT forward 8.
moment when determination anu
calm persistence on the part Of those
who stay at home are more vltally Aee-
essary than they have been at any
other period since the war began. ~.
statesman, | imagine, would enipslA
upon this method of finance unless hs
saw his way TO continue Il TO the emu
Let US examine what is likely 10 nap.
pen in practice. The small invesse
has d';ring the war invested ip s,ss
securities Z sum Of not less thaa
e240,000,000, of which el65,0G0,eUo y
payable by the statc on demand Ihs,S
is a further sum Of approXlms1ss
9250,O00,00o of deposits in the =, ross :.
office and trust savings banks. Ihe.'
are some s11 100000 active accounts -
the Postoffice Savings Bank alone.
Would Lose in End
"If premium bonds prove popular ".
doubtedly hundreds of thousands "a =;
these investors and dcpositors wou~
transfer some of this money into pr, Nv
MUM bonds, and the state would De "
richer, hut would be put to iu'Eie1a'. a !.
labor and expense. Having acquifeur :,
few bonds, these people, VINO na's az
lcarned-many for the first time ~. ~.
ing the war-the advantage OF pe,s::.s, p,
ence in saving, would, instead OF os'Hs
encouraged in this habit, relinquls.:. =
!. in the expectation of gaining p.'
The. spur to persistent sefort a. md
method of arriving at the desired s1s 4
would most surely disappear IN isiS ,U,k. /.
the chance of reaching it oy .h., IN
Therefore, if the war is to last an0ias. !'' ,as.
year Or mo1e, the government WIZ IN Il.
rather than gain in the amou"s :
vested. -.
"And what would happen after ~
war? !,
even the most ardent supporters :. :,
. premium bonds only look upon 'hea. s,s. :.
, war measure. Is it reasonable " .,s. srs
pose that, having cultivated TINS i f'is =.
bling spirit, the millions Of shlan ,asrt
vcstors would return to the ofa'II.si;, =. i,
solid but unexciting investments .osN =.
much more probable that they, wSA NssA
become the prey of any fnanciai ,is - sAta ~
who might dangle in front OF thsm Ami.
possibility of big increment o. 20 4
tai from some worthless mih'nt th.s
! other speculative share, while I'm