The Western news. [volume] (Libby, Mont.) 1933-current, 1935-03-07

which cannot be filled. And the gov
eminent has been able to get money
Mt around ] per cent repeatedly.
Different Proposition
But bankers and insurance men
point out. this baby bond issue pre-
sents an entirely different proposition.
In the case of people taking short term
government loans, their motive Is to
obtain little return on their money
while they are waiting. They hope
that by the end of the period OF that
loan they may find some safe invest
ment, which will yield them larger
return. Proof of this Is In the fact
that for long term bonds the govern
ment has to pay from two to four
| times as much interest.
But In the case OF the baby bonds
| there Is no return at all during the
first year, and only very small return
for the next six years. Moreover. the
| holder Is compelled, II he wants to cash
| In before the higher interest rate De-
| comes effective, to take the price hxed
/ In advance by the government. Other
| investors might be willing to pay more,
/ but the bonds are not transferable.
One OF the governments objects here
is to save money, Of course. Every
/ person cashing the bonds In before ma
| turity takes a very low Interest rate.
Another object Is to keep the bonds
out OF the hands of the banks. There
has been a great deal OF criticism OF
government financing on the score that
It was loading the banks up with gov
eminent bonds, and thus restricting the
amount OF money which could better be
employed at stimulating industry.
| Not being negotiable, these baby
bonds will stay out Of the banks, thus
serving this purpose. But the fact
that the bonds are not negotiable also
lessons their attractIveness to inves-
tors. This might not interest the chap
who buys Just one bond for $3.50. But
It would interest considerably the man
or woman with few thousand dollars
to Invest. Hence the prediction that
the total sales Will rot figure heavily
In the governments fiscal plans.
In fact, this is frankly admitted BY
some administration officials They adj
nit they would like to see certain 9TH
er effects. Just holding bond OF any
sort. they point out, has the effect OF
making the holder just little more
conservative. And incidentally making
him in way partner In the New
Deal.
Gold Clause Decision
One OF the most significant things
about the gold clause decision OF the
) | Supreme court was not only the Sc
crecy which shrouded what that de
cisIon would be--indicated by the fact
that some Of the first news flashes were
very misleadIng--but also the moves
the administration had planned to coun
teract the effects In case the decision
should have gone 100 per cent against
the government.
For II can now be stated that mo-
even the speaker of the house, no.
leading administration senators, had the
slightest idea what would be done
Just three people really knew. The.
were: President Roosevelt, Secretar.
OF the Treasury Morgenthau. and AT
torney General Cummings
And that Cummings knew liz the writ
er's guess Cummings does not admi
1t. So 1t might be possible that TIL
] third person who knew was not Cum
mlngs, but some other lawyer on who's
: Judgment the President and Morgen
J than could rely.
Legal advice was produced for tn
treasury In plenty, but those furnish
Ing 1t we're not sure how 1t would b
used. Some OF the decisions asked 70
= were AS to public utility rates. For II
I stance, In many past decisions, court
! have ruled that contracts between uti
z ,ty companies and their customers oil
' not bind either side II legal bod,
; which had the right to change rate
. should change them.
] Inference OF the employees suppl.
Ing this information assumed, and sti
assumes, that this was for calculatin
the courts decision, In advance, rattle
: than deciding what to do should tt
. court rule otherwise than 1t did.
y But while the actual decision as
? what would be done In the event of
y decision against the government ms
9 never be known. and will not be unlel
y the President should decide to let
leak out, there are some excellel
- guesses.
II Some Deductiony
r. One high treasury official, known 4
m his shrewdness. made some lnterestiI
at deductions In advance For eXampl
nj he had the idea. stressed In the m
at jorlty opinion by the court, that Il
amount Of damages would have to
IN determined In conrt-that certainly
IN court would force company to pi