The public ledger. [volume] (Maysville, Ky.) 1913-1968, 1920-05-15
why LIBERTY BONDS
ARE Low and The
COST or LIVING HIGH
Assistant Secretary of the Treasury
Gives Some Reasons For High
Price Of Commodities.

Why Liberty Bonds are low and
prices of commodities are high was
authoritatively explained recently be-
fore the Academy of Political Science
by II. c. Lefiingwell, assistant secre-
tary of the Treasury At this critical
moment, he said, many of the people
have turned gamblers and MASTERS. For
plain living and high thinking he have
substituted wasting and pickering. We
enjoy high living while we grumble at
the high cost of living-of silk stock
ings and shirts for the poor, of auto
mobiles for men of small means, of
palaces for the profiteer and the pluto
crat.
For five years" he continued, 1.-The
world has been consuming more than
it produced living upon its capital and
the governments of the world have
been issuing evidences of Indebtedness
to represent teh wealth destroyed. This
has caused world imitation of prices.
when they were issued, no one
could forsee the probable course of the
market for Liberty Bonds and Victory
Notes in the future with any degree of
confidence.
"a year ago, it was freely predicted
by financial authrities that Victory
Notes would shortly go to a premium
and that Liberty Bonds would be sell
ing at or near par within a year of
two.
Everyone knows why these SAN
guine expectations have not been real
lied With the armistice and still more
after the Victory Loan, our people un-
der went a great reaction. Those who
had bought Liberty Bonds as matter
of patriotism but not as investors be-
gan to treat their bonds as so much
spending money. Those who had obey
ed the Injunction to borrow and buy
Liberty Bonds ignored the complement
tary Injunction to save and pay for
them.
A $50 bond in the hands of a patrioi
turned spendthrift was to him a 500
bill to be spent Saturday night or to
her a new hat and if the $50 bill turned
out to be a S45 bill small mater. This
was the first and most immediate
cause of depreciation of Liberty Bonds
| thap, M tip1,larly
81 doubt whether higher rates of
interest on Liberty Bonds which would
have meant more taxes for the ia (
payer and more spending money fer
the bondholder, would have had any
other effect than to increase the intla-
ton which has been rampant since tf'
Victory Loan. Some critics say that
the Treasury should have foreseen the
| after-the-war reaction and in order t.
protect bondholders from the conse-
uuences of their own acts, issued tie
bonds and notes at rates finterest
which would insure a market price for
them at or near par even in the period
of reaction.
This is inhationist doctrine. The
bonds and notes were never meant 10
be treated as spending money. The
Civil War gave us our fill of intere L
bearing currency. Depreciation in
market prices serves as check upon
those who wish to spen dtheir bonds.
In the history of finance, no device was
ever evolved so effective for procuring
saving as the Liberty Loan campaigns.
There was no plan of financing the
war or of financing the period of re-
adjustment which would protect the
holders of the governments securities
or the governments credits aSa.nst
subsequent folly and waste.
Instead of telling the people frank
ly and boldly that prices are high be-
cause they are wasting we fixe prices
and prosecute profiteers in order that
the people may buy more and pay less.
Instead of telling the people that Lib
erty Bonds have deprecated 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
disguised as refunding operation.