The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1920-05-11
THE LIBERTY BOND SLUMP.

I THE LIBERTY BOND SLU MP.
| The fact that the bonds of the
wealthiest nation on earth are being
around IS cents ON the dollar is at
tracing widespread attention. Why
are liberty bonds so greatly depre-
ciated in value?
Secretary Houston says that the
present prices of liberty bonds are
causing no loss to real investors who
are holding their bonds as permane
investments. and they are not suffer-
ing because others are selling their
bonds for less than they are worth.
In this statement. says the Manufac-
turers Record, Secretary Houston
entirely ignores the fact that the fed
eral reserve board, largely under the
influence of the treasury department,
has practically forced all banks of the
federal reserve system to compel their
customers to take up their liberty
bonds. which has necessitated throw
ing them on the market.
One illustration out of thousands, it
says. is an answer to Mr.. Houston. A
Baltimore bank which had been al
lotted a very large amount of liberty
bonds went to its customers and
begged them to subscribe for as much
as they could possibly make a first
payment on, as this would help the
country and help the bank to carry it's
load, and stated that the buyer would
be enabled to carry these bonds thru
the bank until able to take them up.
One customer was induced in this way
to take 100000 worth of bonds, and
he made his first payment in accord
ance with the banks requirements. A
few weeks ago, when the federal re-
serve board notified the banks that
bond loans, the officers of this partic-
ular bank had to go to that particular
customer and insist that he take up
his entire loan, but being unable to do
it he was forced to sell his bonds at
loss of 100000. and he is that much
poorer for his faith in the promise of
the bank, in the promise of the fed
eral reserve board, and for his patriot
ism. He is only one of several mill
lions who have been forced to meet
the issue in the same way. and yet
Secretary Houston tells the country
that the present prices of liberty bonds
are causing no loss to real investors.
Bond buyers who were able to pay
for their bonds in full and put them
aside believing that if held to matur-
ity they would get their face value are
tai number who subscribed. Millions !
beyond their financial abil- |
ity to pay even for period OF two or
three years. They subscribed because |
they were told that these bonds were |
the safest investment in the world, |
with the entire resources and moral |
strength of the nation back of them, |
bonds decline until they stand today |
facing a, loss of 10 or 16 per cent on |
their purchase. The banks have
forced them to take up the bonds or
to throw them on the market, and yet |
while forcing them on the market the |
department has been buying |
in these bonds with one hand while
beating them down with the other.
The United States government, thru
It's treasury department and the fed
eral reserve board, working in har-
mony, one largely dominating the
other, apparently have done their ut
most to break down the pledge of the
national honor. destroy the value of
the governments securities, destroy
the peoples faith in the honor and in
tegrity of the government, and at the
same timc the treasury department
was issuing securities at higher rate
Of interest and buying in the nations
bonds at the deprecated prices thus
forced upon the country.
The people feel that they have not
been given a square deal and it is not
surprising that the secretary of the
has announced there will be
no more bond issues. He would find
It difficult to market additional gov
eminent securities at this time. Faith
in the solvency of the government is
as firm as ever but faith in its fair
dealing has been sadly shaken.
Announcement is made that one of