Imperial Valley press. (El Centro, Calif.) 1907-current, 1920-05-15
LIBERTY BONDS
SPENDING MONEY,
NOW THEY'REL0N
Noted Expert Giues Reasons
Why Bonds Are LOlU; Less
EsfraUagant Spending Viii
Stop Depreciation.

Why Liberty Bonds are low ant
prices OF commodities are high wa
authoritatively explained recently be
fore the Academy of Political Scienc,
by R. c. Leffingwell, assistant secre.
tary OF the treasury. At this critica
moment, he said, many of our people
have turned gamblers and MASTERS
For plain living and high thinking we
have substituted wasting and bicker.
ing. We enjoy high living while we
grumble at the high cost of living
OF silk stockings and shirts for the
poor, of automobiles for men of
small means, of palaces for the pro-
flteer and the plutocrat.
For five years" he continued
1.-The world has been consuming
more than it produced, living upon
It's capital and the governments of
the world have been issuing evil
dences of Indebtedness to represent
the wealth destroyed. This has caus-
ed world initiation of prices.
When they -were issued, no one
could foresee the probable course Of
the market for Liberty Bonds and Vic
tory Notes in the future with any
degree of confidence.
A year ago, it was freely predict
ed by financial authorities that Vic
tory Notes would shortly go to a
premium and that Liberty Bonds
would be selling at or near par with
in year or two. y
BOND ARE LOW
Everyone knows why these san
guine expectations have not been real
lied. With the armistice and still
more after the Victory Loan, our
people underwent a great reaction.
Those who had bought Liberty Bonds
as a matter of patriotism but not as
investors began to treat their bonds
as so much spending money. Those
who had obeyed the injunction to
borrow and buy Liberty Bonds ignor-
ed the complementary injunction to
save and pay for them.
A $50 bond in the hands of a
patriot turned spendthrift was to him
a $50 bill to be spent Saturday night
or to her new hat and if the $50
bill turned out to be $45 bill, small
matter. This was the first and most
cause of depreciation of
Liberty Bonds affecting them partic-
ularly.
Il doubt whether higher rates of
interest on Liberty Bonds which
would have meant more taxes for the
tax payer and more spending money
for the bondholder, would have had
other effect than to increase the in
flation which has been rampant since
the Victory Loan. Some critics say
that the treasury should have fore
seen the after-the-war reaction and
in order to protect bondholders from
the consequences of their own acts,
issued the bonds and notes at rates
of interest which would insure a
market price for them at or near
par even in the period of reaction.
NOT SPENDING MONEY
"This is inflationist doctrine. The
bonds and notes were never meant to
be treated as spending money. The
Civil war gave US our fill of interest
bearing currency. Depreciation in
market prices serves as check upon
those who wish to spend their bonds.
In the history of finance, no device
was ever evolved so effective for pro-
curing saving as the Liberty Loan
campaigns. There was no plan of
financing the war or Of financing the
period of readjustment which would
protect the holders of the govern
ment's securities or the governments
credit against subsequent folly and
waste.
"Instead of telling the people
frankly and boldly that prices are
high because they are wasting, we
fix prices and prosecute profiteers in
order that the people may buy more
and pay less. Instead of telling the
people that Liberty Bonds have de-
preciated because they are treating
their Liberty Bonds as spending
money, we clamor that the rate of
interest upon the bonds is too low
and urge bonus to bondholders dis
guised as a refunding operation.
"High rates of interest and dis
count, limitations of currency and
credit, these and all other traditional
methods should be used courageonsly
but they will not suffice under the
abnormal world conditions now pre-
vailing. We must get together, stop
pickering and face the critical situa-
ton as we should foreign war. We
must cut government expenditures to
the quick, abjure bonuses and realize
promptly upon all salable war assets
Above all we must work and save. We
must produce more but more import
ant still, we must consume less"
The retention of Liberty Bonds ant
their purchase at present marke,
prices and the safeguarding OF savings
by means of government savings Sc
curities are advocated by the treas.
ury department as sure methods OF
rectifying the economic conditions
Mr.. Leffingwell outlines above.
One dispatch from the City, o.
Mavioo save that CarranZa has beer