Great Falls daily tribune., 1919-02-04
THE NEXT BOND ISSUE

issue of war bonds 1t needs between five and
six billions more in the way Of war bond loan,
and the treasury department idea is to float the
loan in the same way it floated the others and
through the same agencies, relying on the pat
riotism Of the people to subscribe and the re-
serve bank committees all over the country to
make the dyive. The secretary Of the treasury
opines that it can be done with the slogan, help
the government, not to win the war, but to bring
the boys home"
If the war was still on there is little doubt
that the peopel would flock to the aid Of the
treasury and absorb another 454 per cent loan
or even one bearing lower rate Of interest than
that. The subscribers to the last loan took the
bonds at par when they well knew that they
could buy them in the open market at lower
price than the government asked for them That
is proof positive that they were not purchased
for investment but for patriotism. In recent
DAYS the last loan bonds have been selling at a
discount on the open market that amounts tc
more than the first years interest on the bonds
People who hold them are willing 10 sacrifice
five per cent of their purchase price to turn
them into cash. The war is over. 1t is won
whether the next issue of bonds are sold or not
The circumstantances are very different tc
those which prevailed at the time of the last
bond flotation There are some who advise the
government that they will have to make the
next bond issue straight business investment
in order to get it subscribed generally as the
government would like to have it subscribed
and that they must raise the rate of interest by
half or three quarters of one per cent.
A five per cent government bond issue Would
doubtless be fully taken at par on a straight n
vestment basis, but there are serious objections
against it from motives Of public policy In the
first place, it would have tendency ID drain the
banks Of the country of cash savings which as
d rule are drawing not more than four per cent
and that would not b. good thing II WoulG
to some extent cripple their lOanlng power anC
their service to the communities in which they
are located Then five per cent bond issue By
the government would at once raise the question
why discriminate against the patriotic men who
came to the aid Of the nation when its need was
sorest and bought 3I2, and 4 per cent bonds
at par. These men are entitled to as favorable
treatment as the cold-blooded investor, surely
and have moral right to change their lower rate
4
granted the new loan would be a very expensive
one indeed, for Uncle Sam.
It seems to us that the higher rate Of interest
plan is not good one for the government Il
could, perhaps, attain the same end by issuing
say a per cent tax free bond which would un
doubtedly sell at par or better on the open mar
ket The tax free 3Ia per cents Of the first is
sue now maintain market price Just little
under par The new per cents if given The
same exemptions, would probably bring a prem
ium to their holders in short time. They Woulc
also be likely to bring out large subscription:
from wealthy men, The objection to the ia,
free bond that was voiced after the first wal
loan was that it took wealth out Of the war ta2
paving power Of the country. That objection j.
less weighty now that the war is over, and this
is probably the last bond issue the government
will need to float AS between tax exemption
and d high rate Of interest, we believe that tht
advantage to the nation lies on the side Of ta3
exemption al a feature Of the new loan. Tht
great public which subscribed the other loan.
are certainly feeling some reaction now. Many
of them cramped themselves financially to takt
the bonds they subscribed from patriotic mo
tiyes and have the 'et George do it, feelin1
n now that u new loan Is proposed We are no
saving that the new loan Of five or six billior
cannot be raised in the same way the other loan:
were floated but we certainly have an idea tha
it will be much harder task than the last one
was unless the bonds are made attractive from
q purely investment standpoint.