Great Falls daily tribune., 1920-06-02
THE PRICE OF LIBERTY BONDS

they were swindled because the patriotic sales
man and the newspapers held out the assurance
that they could always turn them into cash with
out loss when they needed the money. No doubt
there is ground for this complaint for that idea
was widespread. The government however is not
properly charged with any blame for the fact.
The government made it's promises to the hold
ers on the face of the bond. 1t has strictly lived
up to these promises. They were two in number.
They said they would pay certain rate of inter-
est on these bonds regularly twice year. They
have done so. They said they would repay the
principal in full at certain stipulated date. I'm
questionably they will do SO when the date nam
ed arrives. They did not promise to pay the
principal before the bond was due, or to guaran-
tee that some other fellow would pay it in case
the holder wanted his money before that time.
That idea is nowhere specified in the bond.
The fact that the government and fnanciers
generally expected Liberty bonds to sell in the
open market at par was based on the expecta-
tion that there would be as many savers of
money seeking such high grade investments as
there were spenders of money seeking to con-
vert the bonds into cash. The financiers who
held that opinion fell down both ways. After
the war was over the great mass of the people
of the United States quit saving money and
went in for an orgy of extravagant living and
spending. The inevitable effect of supply and
demand was seen in the price of Liberty bonds.
Far more people wanted to sell their bonds than
the number who wanted to invest their savings
by buying more bonds. Tight money and a vast
need of capital or savings all over the world
diminished the inadequate sum of savings to in
b,- into
The reluctance of the banks to lend money for
luxuries and extravagant living forced many
Liberty bond holders up against the necessity
Of going without the luxuries they wanted or
selling the bonds on a low market At consider
able loss Some took one way and some took the
other But the temptation to spend money for
luxures was strong enough to force many hold
ers of bonds to sell them at a loss in order to gra-
tify their desires.
One other principal factor in the rising flood
of bonds offered for sale to the highest bidder
lies in the fact that many of them fell into the
hands of people who never saved any money be-
fore, and only did it during the war because it
appealed to their patriotism, or because public
opinion forced them to do so. In many cases
employers bought the bonds for them and let
them pay for them in very small nstallments
which were deducted from their wages. 1t was
some time after the war was over before the
bonds came into the personal possession of such
people, and the first thing they did when they
got them was to sell them for what they could
get in order to spend their forced savings as
soon as possible
This added greatly to the supply of bonds Of
fered for liquidation. The amount so offered
recently in the New York stock exchange in
single day has lowered around thirty million
dollars. Of course, there are many other rea-
sons for the large offerings. The Wall rtrcet
Journal gives one which had not occurred to us
before we read it's editorial on the subject. That
is death of the bondholder. Very often when a
man dies and his estate is settled there is pres
sing need for cash. and Liberty bonds can al
ways be turned into cash at some price. The
Wall Street Journal in commenting on the sub
ject says:
'In what, for the New York World, is a some
what labored leader, number of reasons, suffi-
GENTLY pertinent, are given for the continual
pressure Of sales on the market for Liberty
bonds and Victory notes. It is curious that the
heaviest source of selling is not mentioned. 1t
is also the most obvious source Indeed if the
Worlds editorial writer had been equally con-
versant with vital statistics he would have plac-
ed that selling first, and made the other sources
of liquidation merely incidental or at best sup
Elementary.
This remorseIess, persistent, inexhaustible
seller is none other than our old classical ac-
uuaintance Pallida Mors Pale Death strikes
with equal footstep upon the thresholds of those
who have bonds and those who have none. 1t
is said there were twenty million subscribers to
the various bond issues. Let US be conserva-
1-1H ILL., f1r~ ,n1tn