The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1920-05-12
WHY BONDS ARE LOW.

why lDerty DOn0S are low ana
prices of commodities are high was
explained recently before the Acad-
envy of Political Science by r. C. Left
fingwell, assistant secretary OF the
treasury. At this critical moment, he
said. many of our people have turned
gamblers and MASTERS. For plain liv
ing and high thinking we have sub
stituted wasting and pickering. 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 profiteer and the
plutocrat.
High rates of interest and discount
limitations of currency and credit,
these and all other traditional meth
ods," he declared, should b. used
courageously but they will not suffice
under the abnormal world conditions
now prevailing. We must get togeth-
er. stop pickering and face the critical
situation as we should a foreign war.
We must cut government expenditures
to the quick, abjure bonuses and real
ize promptly upon all salable war as
sets. Above all we must work and
save. We must produce more, but
more important still, we must con-
sumo Tess"
Perhaps there could be found no
better place to begin the cutting of
expenditures than in the treasury de-
partment itself and the cutting proc
ess could be extended to all other de-
partments without congressional ac-
ton.
For five years, Mr.. Leffingwell said.
the world has been consuming more
than it produced, living upon it's cap
ital, and the governments of the world
have been issuing evidences of indebt-
edness to represent the wealth de-
stroyed. This has caused world in
flation of prices. When they were is
sued, no one could foresee the prob
able 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 authorities that victory
notes would shortly go to a premium
and that liberty bonds would be sell
ing at or near par within a year or
two.
Every one, he continued, knows why
been realized. With the armistice and
still more after the victory loan, our
people underwent great reaction.
Those who had bought liberty bonds
as g. matter of patriotism but not as
investors began to treat their bonds
as so much spending money. Those
who had obeyed the injunction to Dor
row and buy liberty bonds ignored the
Complementary injunction to save and
pay for them.
A $50" bond in the hands OF a patriot
turned spendthrift was to him $50
bill to be spent Saturday night or to
her a new hat and if the $50 bill
turned out to be $45 bill, small mat
ter This was the first and most inn
mediate cause of depreciation of lib
erty bonds affecting them particu-
larly.
Mr.. Leffingwell pointed out that the
bonds and notes were never meant to
be treated as spending money. The
Civil war, he said, gave US our fill of
interest bearing currency. Deprecia-
ton in market price serves as a check
upon those who wish to spend their
bonds. Instead of telling the people
frankly and boldly" he said, that
prices are high because they are vast
ing. we fix prices and prosecute prof
iteers in order that the people may
buy more and pay less. Instead of
telling the people that liberty bonds
have deprecated because they are
treating their liberty bonds as spend
ing money. we clamor that the rate of
interest upon the bonds is too low and
urge a bonua to bondhoIders disguised
as a refunding operation"