The Rock Island Argus and daily union. (Rock Island, Ill.) 1920-1923, 1922-06-14
Frederick Haskin's Letter
Especial cOsTespondence
REFUNDING GOVERNMENT BONDS

4, has been made since the armistice
| in pairing down the public debt.
/ The peak of the debt was reached
on Aug. 81. 1919, when it stood at
$40, SGT, 000, 900 which is equivalent
! to 1866 for every man, woman anu
/ child in the United States on
! March 81, 1929, the last date on
which a government financial state
ment was issued. the debt stood at
/ $23, las, 600, 900 or $3,451 900 900 less
! than the peak. That means that
every person in the United States
/ has paid off $50 of his Indebtedness
/ incurred on account OF the war.
Everyone still owes 1921.
! Many persons who owned Liberty
/ bonds have felt some resentment
against the government in the last
/ two years because of the depreCiat-
! ed market value of these securities.
| Attacks have been made on the
treasury, it being claimed that It
was unfair for the government to
i'sell bonds to the public and permit
them to depreciate III value 4
more careful examination of the
merits of the situation Will reveal
| that this complaint is not well
! founded
Why Bonds Deprc ciated.
IN bargain made between the
government and the ond-buyer-
bargain which was made to win
the war-the bond-buyer and not
the government is the one who has
broken the contract. The govern
ment said: Lend me 500 for 10
years. If the government pays
back that 500 at the end of the 10
years, its part of the bargain has
not been broken. And in addition
it has paid interest regularly Bat
in many cases, the bond buyer has
said: Il want my money back I
didn't really mean you could keep
it for 10 years whether there was
war or not. So this bond buyer
has sold his bond. Many did this.
which as a matter of course result
ed in a lower price in the open
market for the bonds. The mar
ket price has nothing to do with
the original bargain between the
government and the bond-buyeT.
Despite the fact that the prices
of some issues sagged because the
holders asked for their money back.
bond prices are all on the upgrade
and will continue so until all have
reached a price above par-that is,
above the face value. People will
pay a premium for the privilege of
being a creditor of the government
and receiving the interest which is
paid.
The lowest point reached on the
war loans was a price of $Sl.40 for
1920 The highest price so far was
paid on Aug. 21, 1918-s102.50 for
the first Liberty loan. Since the
armistice all issues have been be-
low par and some of the issues
more than Is points below but now
half of the issues are at 100 or
above and all are within two or
three points of par. The recovery
has been extremely rapid and is
regarded as an indication of the
sound condition of the United
States treasury and the general
prosperity of the country.
The treasury has benefited TO
some extent by the breaking of the
bargain by the bondholdeTs who
sold their, bonds. 1t has bought
back bonds at prices below their
face. Thus, under the sinking fund
provisions of the law. the treasury
had purchased up to the date of the
last report of the secretary of the
treasury bonds of a face value Of
S154. $50 900 at a market cost of but
STAG, .976. Under a special bond
repurchase provision. additional
purchases have been made of bonds
to a face value Of $70,375,300 at
market cost of $69,37S, 257.
In comparison with wealth and
population. the American treaEIry
is in far better condition than that
of any nation in the world and
while the treasury will have to he
skilfei in handling the $5,00O.O00.-
900 financing job of the next p
months, there is no doubt that the
work will be accomplished.