The public ledger. [volume] (Maysville, Ky.) 1913-1968, 1920-06-01
Difference BETWEEN
WANTING MONEY AND
NEEDING IT NOW
Treasury Department Explains the
Present slump In the Liberty
Bond Market Of the
Nation.

S. Treasury Department has issued
this statement:
1t costs money to want II now" No
one konws that fact beteter than the
farmer. He may be in the most pros
porous Of circumstances, his profits for
the year may be practically assured
but in many cases there are times
when he wants actual cash immediate
ly. And he has to pay for it. That sit
uation does not apply to the farmer
alone. 1t operates also in every line of
industry. slElEM
Suppose, for example, that in an of
time of year when ready cash is
scarce, the farmer has an opportunity
to buy a we'll bred Hereford bull at a
bargain. He has not the actual cash,
so he gives a note for $1,000, due in
six months properly secured. 1t costs
him interest on the note. He is good
for the note and will pay it. He knows
that and so does the ma nto whom he
gives it. But he is not prepared to pay
it and does not expect to pay it until
1t is due.
Then the man to whom he gives the
note wants cash-and wants it now.
He knows he will get his money In six
months but he wants it Immediately
He takes the note to a bank and dis
counts it. The bank knows the note is
good, that it is fully secured and will
be paid at maturity but because the
holder wants it now, it will only al
low his $3.50 on the note.
Therefore by wanting it now, the
holder of tn eperfectly good note loses
$3.50 and interest and the bank be-
cause it is willing to wait until the
debt is due, makes $3.50 and interest.
Such transactions all over the country
are so commonplace and well recog
nized that the discounting of notes
form large part of the business of
many banks.
The present situation as regards
the price of Liberty Bonds is exactly
similar to that Of the note given by
the farmer for the Hereford bull. The
U. S. Government needed money imme-
diately to pay the costs of the war II
borrowed it from 100000 citizens
of the country giving obligations to
pay interest and to pay the principal
in full when due
Then large number of the holders
of those obligations decided they want
ed the money now,-before it was due
Just as in the case of the note, they
knew that the obligation was fully sn-
cured that it would be paid without
fail on maturity but because thcy
would not wait, they had had to take
less than the face value of the obliea-
tons.
Like the bank, the investors who are
buying Liberty Bonds at present price,
know that they are making a sure
profit of the difference between the
market price and the face value with
interest. While necessity has demand
ed that some or the original buyers of
Liberty Bonds should dispose of them
even at a discount, many have sold
them without necessity, not because
they needed the money now but he
cause they wanted it now.
Money so acquired at discount and
a sacrifice has played a large part in
the high cost of living 70 rit has been
spent not for necessities but for lux
uries and extravagances. Economists
and financiers all agree that Liberty
Bonds are the best security in the
world both to buy and to hold. The dis
counting of well secured notes by
banks is sound business all agree. but
the purchase of Liberty Bonds at res
ent prices entails even less risk amid
greater profit.