Burlington weekly free press. [volume] (Burlington, Vt.) 1866-1928, 1919-11-06
THE VALUE OF WAR BONDS
Ten Varieties on the Market and
All Good Buys
First IsSue. Bearing Lowest Rate Of
Interest, Bring Highest Price He.
cnuse They Are Exempt from
Income Tax
CBy Frederic j. Haskin)

Every day some scores OF people from
Tampa or Tacoma. from Providence or
Pueblo, or from some other point on the
DIG map OF the most prosperous nation
on earth write letters to the treasury
department at Washington and ask advice
as to safe investments for the moneys
accumulating in their pockets.
That department does not want to put
itself in the position of unduly pushing
Its own wares but It has a lot of conn.,
dence in the government securities that
are kicking about. and really feels that
an opportunity to profit on an investment
In those securities is about as good a thing
as one should want. If properly pushed
treasury officials will reveal a situation
which makes it look as though an in
weston might go far and fare worse than
purchasing government bonds.
In all. there are ten varieties Of war
bonds on the market. The government
has none Of them for sale. They are al
ready sold. They are now owned by the
people. The government makes no profit
by their rise or fall 1t has got to pay
Interest or. them at par and has got to
retire them at maturity. 1t Is all the
same to the government II they sell at
80 or at 100.
Inc HrSt Liberty DOnQS ISSUED drew
the lowest rate OF interest They were
three and half bonds. Strange to say.
OF all the issues this is the one that 10
to-day drawing the highest prices
These threes and half are now selling
above par. The reason for this Is that
they are exempt from income tax. Rich
folks whose surplus income goes largely
into the Golfers of Uncle Sam buy these
bonds and are allowed to keep the whole
three and a half per cent. They are
good buy for the rich folks, but they would
be the worst buy in the lot for a poor
man who is not paying a high rate OF in
come tax.
1t is peculiar that the Fourth Liberty
Loan Issue, which pays four and a quar-
ter per cent. interest, sells way be low
part. 1t is the cheapest of the govern
ment securities on the market 1t sells
around "a. 1t is not exempt from income
tax and so is not good for the rich
man. 1t is fine. however. for the poor man.
1t is worth more than 81 The reason it 10
cheap is largely due to the fact that
there IL much OF 1t. 1t was the big
issue There is six billion dollars worth
OF it. There is always a certain per cent.
of bondholders who are forced to sell for
one reason or another. or big issue
there are more holders who put their
bonds on the market. The old law Of sup
ply and demand works and the price In
run down The Fourth Liberty Loan four
and n quarter. Mt the present price, pays
Al per cent. on the investment,
The bankers favorte of the Liberty
bonds is the third four and a quarter
These bonds mature in ten years. They
are selling a little below par The inter-
est is good and the early maturity in
sures a profit on the buy. At the present
market price they figure to yield 4.E ON
the money put into them.
Then there are the second fours and .
that just now yields the highest return
on the investment They sell around 81
The government has the privilege of re-
firing them In 1927 and will probably do
so. This means that there will be profit
of six cents on each dollar. This added
to the interest that will be collected in
the meantime means that these govern
ment bonds are to-day els per cent.
investment. which is mighty good for the
bonds of the government which is the
most financially sound Of any in the
world.
These figures are based on the known
fact of the rate OF interest paid on these
bonds. and the known figures at which
they will be retired There ia nothing
speculative In government bonds bought at