New-York tribune., 1920-05-16
Whv Bonds Are Down

w tIN ASOhbkc ~ y NCpNAA
"The government put out its
various issues of Liberty bonds at
interest rates way below what
money was bringing and is bringing,
and called on the people TO buy
them for patriotic reasons. The
people bought them through patriot
ism, tied up their money in them
at less than their money would
bring elsewhere. The war is over.
They are getting 4 per cent or a
frac1 IN over for their money and
the price of the bonds has gone
down They cant even get back
their investment. But they can sell
at the market price and reinvest
their money at 6H per cent and
the return on the foreshortened in
vestment will be larger than the
return on the original holdings Of
Liberty bonds, while they can liqui-
date without loss, if necessary. Of
course the holders Of Liberty bonds
sell them, and the continued selling
forces the price still lower.
"There is another highly impor-
tant feature of the Liberty bond
situation. The railroads took large
amounts of Liberty bonds. Every
railroad in the country subscribed
for them in amounts ranging from
$5,000,000 upward. The govern
ment has now turned the railroads
back to the private owners in an
appalling condition. They have got
to spend millions Of dollars in re-
building and buying new equipment.
They have in their treasures huge
blocks of Liberty bonds whose value
has deprecated and which bear a
low rate Of interest. To go out and
get money in the open market they
must pay the new high rates of
interest, while they leave their
capital tied up in deprecated Sc
curities with a low income. In
other words, getting new capital
involves paying twice. Naturally,
they sell their Liberty bonds. The
Stock Exchange reports show it
every day. And the price Of Lib
erty bonds goes lower, and the
people suffer.
An Illustration
"That is one of the factors to
be considered, and it is a big one
when one considers the enormous
total Of the Liberty and Victory
loans. There is another one in
which the railroads are concerned.
can illustrate it by the Great
Northern Railroad There is $780,
100000 in wheat lying along the
Great Northern waiting shipment
into Minneapolis to the flour mills.
That means $3.50, 100000 lying idle
and unproductive and it means sew
eral hundred thousand barrels of
-four short in the country's markets.
THE reason is that while the
government had control of the rail
roads it took $4,000 of the Great
Northern's $4,000 freight cars and
distributed them helter-skelter all
over the country. No attempt was
made to get them back to the own
ing road. 1t takes a special car to
carry wheat. You can't put wheat
into any car that happens to be
handy, or the grain will be spoiled
in transit. The Great Northern was
equipped to handle wheat. Recently
eighty-fve Of its cars were returned
to it, and fifteen out of the eighty
five could be used to transport
wheat.
while the government was in
control of the railroads it got them
in such condition that they couldn t
handle the transportation business
of the country. even if there were
no strikes.
Another factor is the matter Of
production. During the war there
was a general idea that when 4.000.-
900 men who had been called into
the armies were returned to peace
pursuits and the country turned its
energies once more to n1anufactur-
ing and producing for peace instead
Of for 5gar there would be an in
crease in production, one Of the