Evening journal., 1919-04-25
GOVERNMENT noNDs AND OTHER WARS.

tncse days Whtn 80 many Liberty bouus
Bonds held by Delawaroans and when the depre-
citation Of Liberty Bonds Is causing SO much comment.
question often asked is;
Did the price Of government bonds advance after other
warsg"
This question is answered in the affirmative in a
book which has just been issued by Bankers Trust Com
pany, OF New Yorw This book which IS entitled our
Public Debt" gives a historical account Of tho public
debt and description Of the United Stats bonded debt
as exists today. It is pointed out that after every
critical period in the history Of The country, government
bonds have advanced In market value 10 marked de-
For instance, after the funding Of the Revolution
airy debt $780, the first transactions IN the six
cent bonds made at TO- In 1921 these bonds sold
up to AZ and February OF 1892 they sold up to 1928
This advance however. sudden and caused by
such active speculation that there reaction to
lower figure, but athroush The year 1872 the prices
ranged from 0J 20 80 from 35 to 20 points above the
prices at which they sold when first issued.
For several years prior TO the War OF 1912, the rea-
tons OF The United states With both England and France
were much strained and this undoubtedly had an effect
upon the market price Of government securities. holding
them IN the neehborhood OF i0iia TO i03 When the
cloud broke in 1912 prices declined very heavily in
connection with The new bonds which the government
found necessary issue. The six per cent stock II
was then called sold at low So In 1873 went down
10 So IN 1871 touched the low price Of 76 In 1915. Fol
lowing The declaration Of peace I'm 1915 the prices advanced
points advance from The low quotation Of January 1919
Al the time Of the Mexican War the governments
credit much better than 1872 Just prior to the
war United states five per cent bonds were selling at
premium Of around 3 per ccLt. AZ The opening Of the
1876 the government sold six per cent bonds al
from 100 i0 In 1917 It was able 30 obtain 1913 TO
iO2 for skies The ended in September OF that year
Prices did not mmcdia y advance In fact the six
cent stock which the early part Of that year had been
selling at iOs7s sold down 10 low 100 but by August
OF the following year 70 had advanced 10 iOi& and by
December TO O1& In 1919 The six per cent bonds sold
up 70 ~ and in June they reached ii5.
story Of the Of the market during and after
ihc Civil War Is very similar. This war involved much
heavier financing than either OF the former wars and
this nnancing was carried in the face Of dlsrup
ton OF the Union and therefore the difficulties which
besa the treasury especially at The beginning Of the
war were OF the gaVes character. The great mistake
Was made of issuing legal tender notes which soon sold
at heavy discount 90 use the language OF The tme
gold sold 40 a premium" with the result That although
the bonds were nomnaly placed at par. yet actually on
account OF the depreciation in the value OF the legal
tenders ihe price which the government realized was
much less than 800 per cent in gold. The pressure for
funds became SO great and The depreciation OF the doll
lar was So pronounced that In july 1864 six per cent
bonds nominally quoted a iC2 were actually worth on
gold basis only about 90 making the real interest cost
of the money tho treasury over IS per cent In jan
uary 1865 the gold price Of the Skies Of 81 was oo%.
Tho war ended in April of that year and in May The
bonds advanced on gold basis TO so or nearly GO per
cont advance from the low point in January and 100
Der cent advance from the low point OF the previous
July From this time on the bonds fuctuated IN value
but the prices gradually advanced until IN 10" tney
were selling ai iO2 gold value.
From maximum actual interest basis Of i5s per
cent during the height OF The in 1861 ana, six
per cent basis in 1870 the credit Of the government
steadily improved until 1879 10 was ON four per
cont basis and in 1880 3A cent basis, ana from
mon ON Il continually improved until finally bonds sold
al as low an interest basis two per cent
Al he llme Of the currency crisis in 1891 when
President cleveland by sheer personal courage prevented
general bankruptcy by his able handling OF the slualon
bro,ab an by The effort to artncally bolster up the
~ NJ silver r. was found necessary to sell considerable
amounts Of bonds for the purpose Of securing sold One
l lo NJ Fours was sold in February, 1895 at iOii9
and another in January 1896, at H. These bonds adj
yanccd in 1897 to 1905.
For ihe purpose Of financing the Spanish War popu-
lar loan al three per cent interest placed at 100
These bonds Immediately advanced that they com
,nanded in 1898 an average price Of 1881 In 1879 the
average nriee was over Os and in 1900 the average price
was iO972
After every other crisis the countrys history tho
amount OF debt outstanding has been rapidly decreased
Tho operation of the sinking fund Of s50O0OOOOO year.
which Congress has decreed shall go into effect beginning
Julv 1920 should bring about similar result in connec-
lion with our present war debt The aim OF the American
nation always has been 10 rapidly liquidate debt (which
has been made necessary by special crises in the country
history As in every previous instance, after crisis has
passed the bonds have advanced In market value to
marked degree It may be expected that such will be the
case with the Liberty issues