The news scimitar. (Memphis, Tenn.) 1907-1926, 1919-02-14
Methods to Sell Bonds,

1t may be desirable to adopt all of
these methods in succession" Mr..
Glass said, Conditions In April might
be such that it would be wise TO issue
a short-tlme note bearing a relatively
high rate of interest and carrying with
u the privilege Of conversion into bonds
bearing interest at a lower rate and
having a longer maturity. On the other
hand, 1t might be desirable to make an
alternative offer for bonds and notes
leaving the subscriber a choice between
the two.
II am by no means convinced that
conditions will be such in April as to
necessttate an increase In the interest
rate over that provided In existing law
to an important extent II at all, vet II
| were obliged to determine now what
Is the lowest rate at which l could un-
dertake with certainty to finance the
requirements Of the government when
the issue is offered In April, l should be
obliged TO name a maximum rate much
higher than that which, if develop
ments are as favorable as | expect they
viii be in the interval, will, l hope, be
sufficient to float the loan.
The floating debt, represented by
treasury certificates now outstanding,
and to be issued In the interval before
the Victory Liberty loan Is offered,
be refunded, and bonds or notes
must be sold to an amount sufficient to
accomplish this purpose. To withhold
rom the secretary of the treasury the
power to issue bonds or notes bearing
such rate of interest as may be neces-
sary TO make this refunding possible,
might result In a catastrophe. To speci-
~ in the act the maximum amount Of
interest at a figure sufficient to cover
all contingencies, would be costly be-
cause the maximum would surely be
taken by the public as the minimum"
Premium at Maturity.
Discussing his suggestion that au-
thority be given to issue bonds similar
to the successful British national wal
bonds, Mr., Glass said that payment of
a slight premium at maturity would
have a number Of advantages over an
Increase In the nominal interest rate,
carrying an Involvement to saving and
retention Of the bonds, tending to limit
depreciation, probably having a less in
furious effect upon the market value
Of existing issues and making possible
more exact computation Of the effective
Interest rate to be borne by the bonds
or notes, =
"A fractional semiannual interest
payment involves infinite annoyance to
bond holders, banks and the govern
fent itself, which would be to a great
extent avoided by payment Of a small
premium only once at maturity the
secretary pointed out,
Exemption from taxation to be car
ried by the new issue, Mr.. Glass said,
would not be greater than that con-
ferred in the first Liberty bond act nor
less than exemption from state and To-
cal taxes.
whether the needed attraction should
be found in increased interest rate or
in additional exemptions from taxation
or by a combination of both would be
unwise to determine now" Mr.. Glass
declared,
THE cessation Of hostiities. the dis
continuance OF war work and wal
wages have greatly decreased the in
vestment power OF the millions Of patrt-
otto Americans of small means, who
subscribed so literally to the second,
third and fourth Liberty loans, They
will, / know, subscribe and subscribe
largely to the Victory Liberty loan
subscribe as largely as they have sub
scribed for bonds of other loans lido
not know, In any event, 1t Is essen
TALLY in their interest that an obliga-
tion be devised which viii not only
be attractive to them in the first In
stance, but which viii have such char
acteristics as will tend to insure the
maintenance Of its market price after
the drive Is over"
Protect Present Holders:
Mr.. Glass added that II was essen
tlat AlSO 10 devise spHle plan lot pTo-
tecting the holders of existing Liberty
bonds suggesting that additional ex-
emptions from taxation be given those
who subscribe to the new issue.
Immediate steps to set up a sinking
fund for the retirement of the a
debt was recommended,
Provisions to finance the purchase Of
goods In this country by the allies were
declared necessary because OF the tenn
porary exhaustion of European
tries and the transition of the United
States from the status of q debtor to
a creditor nation.
Some measure of governmental aid
during the transition period Is neces-
sary," Mr., Glass said. III we are to
be able to export the food supplies
and other commodities which European
allies desire to secure and which 1t Is
to our interest to sell them"
Extension of the powers of the war
finance corporation, including authority
to make advances to exporters not TO
exceed 1000. 900, 900 at any one time,
would put into play methods approxi-
mating commercial practice, Mr.. Glass
said, without resort TO the treasury.
Funds would be obtained through the
sale OF the corporations bonds TO the
public,
In cases where the government would
be the vendor, the war finance corpora
TONS machinery could not be used and
so Mr. Glass asked a broadening OF the
purposes for which loans may be made
to foreign governments.
1T Is anticipated that substantial