The Washington herald., 1918-03-21
M'ADOOCALLS .
MEETING UPON
LIBERTY
F Federal Reserve Board
Members Will Discuss
: Terms of Third Issue.

Liberty Loan plans held up still
further by Secretary McAdoo yester-
day. Instead OF conferring with Treas
ury experts preparatory to advising
fifth the House Ways and Means
Committee today. Secretary McAdoo
announced he had called q conference
of Federal Reserve Board members
and heads of regional liberty loan
committees for Friday afternoon.
At this conference. he said. he ex-
poets to work details on the Third
Liberty Loan as regards the amount
necessary, the rate of interest to be
paid on the issue, etc.
No Increase.
Hopes Of financial people that the
next issue will be at l1-2 per cent
have practically gone glimmering. it
is understood. 1t was pointed out in
the Treasury Department that in Or
der to sell the neat issue Of liberty
bonds at 41-4. Secretary McAdoo
must obtain permission from Con-
gress. Thus far Congress has
authorized only the per cent rate.
1t will be practically a physical i'm
possibility to put through a new law
authorizing a bond fiotation and fixing
a rate OF IL in the time remaining
before April 6, when the Third Lib
erty Loan campaign starts.
If Secretary McAdoo should submit
his ideas to Chairman Kitchin's COM
mittee on Saturday 1t Is hardly likely
a bill could be introduced before Mon
day the 18th. That would leave only
twelve legislative days in which to
comply with all legislative formalities.
get the bill through both House and
Senate and have it signed by the
President.
II there were no opposition what
ever, this would be a most difficult
program, Treasury officials admitted
last night. But it is regarded as GER
tain there will be opposition. es-
pecially to the proposition to make
the rate on the new issue 41-2 per
cent.
KItchIn's Beliefs.
Chairman Kitchin is reported to
have told Secretary McAdoo that
many members of the House are now
in favor of paying IL per cent on
the next issue. This rate would, how
ever. make bond holdings subject to
all taxes and supertaxes, in the view
of these members. Kltchi1,s position
is that the higher rate would attract
many small buyers whose holdings
would not be affected by the super
taxes. Several members of Kitchin's
committee do not agree with him on
this point.
Members of the Ways and Means
Committee now take the position that
the time has come for the government
to dictate the rates OF interest 1t will
pay on its bonds. 1t is the biggest
factor in the markets for men, ma
terial and money, they point out. and
there is no reason why it should not
command each market -Four and
one-half per cent. they declare, Is too
high, and will add too much to the
already heavy war burden loaded on
the backs Of the next generation.
Conversion of the first two is
sures alone will cost more than $780,
e00, 900 To make the first issue of 3 I-2
per cent bonds pay -, would cost
$500, 100000. To make the per
$500. making a total conversion
cost of $76O,S76,6 500. This excludes
the expense of printing new bonds,
distributing them, etc.
In addition to the fact that Con-
gress holds a line on rates of in
terest, it dictates the rates on short
time Treasury certificates. which
must be issued at the same rate as
the bonds on which they are based.
All the Treasury certificates sold in
anticipation OF the next liberty
loan bear per cent. For these two
reasons II is nredicted foniPht tho
the next liberty loan. whatever the
amount. will bear only 4 per cent.
Secretary McAdoo said last night