Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1921-09-17
SELLING GOVERNMENT SECURITIES.

Ment before long to market considerable quantities
OF ITS securities. and il is important that we under
stand before this IS done some Of the differences
which exist between the situation now and that
when the various issues Of Liberty bonds were sold
during and Immediately succeeding the war,
During that period our government was sue
worth of bonds, these being taken almost entirely
by its own citizens. Under like circumstance an
other 80 billion dollars worth Of bonds could be
sold. because it is impossible to place q limit upon
the effort which would be put forth by the Ameri-
can people in carrying out ! movement whose pur-
it's success in a war upon which it had embarked.
The conditions now, however, are entirely different.
and the selling of bonds today must proceed upon
an entirely different basis. AS a matter of fact, while
the Liberty bonds were purchased by the American
people, a very large number Of those who contract
ed to buy bonds never became their real possessors.
Banks and other financial agencies which were not
expected to invest permanently in these. securities
were expected to take them as ! temporary invest
ment, advancing the, money to the government and
selling to their customers on credit. Avery large
number OF bonds so contracted for were actually ta-
ken and paid for, the people providing the means
out Of their savings. and there are thousands Of saw
ings deposit boxes now which contain a few bonds
each, these representing the modest acclmulations
of several millions of people. But there were many
others who made no payments. or who have made
one or two small payments, felt themselves unable
to continue, and these eashed in On whatever equity
they possessed and left the bonds in the hands Of
the financial agents who had originally taken them
from the government.
Mznyother bonds which were actually paid for
by individuals were promptly sold. These bonds
also passed into Other hahds, the tendency being for
them to accumulate in the hands Of real investors
who had funds which were not required for imrne-
date use.
The methods which were employed IN the sell.
ing OF. Liberty bonds and which to the degree indi-
Gated failed of a complete public distribution Of the
securities, cannot be employed now in the selling of
new issues. The same appeal to patriotic spirit can
not be made, and to any other appeal there would
new issues will be taken largely by private investors
of small means. The economic upheaval Of the past
few years has whitfield incomes and caused small
Accommodations to disappear so that even If the peo-
pie were willing, they have not the ability to come
forward as promptly as they did before TO take these
securities. The new issues must be sold to people
on their merits from the investment standpoint.
Only those will purchase them who are actually
looking for investment, and in order to attract those
people the income on the bonds must Sc fixed It !
rate which: will be attractive to them in competition
with other forms OF investment which are available.
It is to be hoped that we have seen the last Of
tax-free, issues of bonds. The unwisdom Of these
issues has long been apparent. There are too many
such bonds now outstanding and their existence
prompts . withdrawal of funds from the regular con-
~structive work Of the country aud impairs the reve-
nues 50 that unnecessarily heavy taxes must be lev
led on other tosns Of property. If the new bonds
are not to be tax-exempt, they must Be made at
|tractve by bearing q rate of interest which will
yield returns practically equal to the returns on 9TH
er than government securities. It seems therefore
inevitable that the new issues must bear relatively
high rates of interest. In no other way can their
sale be assured.