Evening star., 1943-04-12
Banker Tells Why War Bonds
Are Worlds Soundest Security
Robert V. Fleming
Explains How They
Prevent Initiation
BY ROBERT v. FLEMING,
President and Chairman of the Board,
PiepS Natiopa1 Rapk

Riggs National Bank.
The Second War Loan Campaign
starting today, in which the
Treasury will borrow $4,000, ,0O0, 900
from the American people, is the
second battle in the most important
fight behind the lines, the fight
against imitation.
In financing the war and fight
ing the domestic enemy-inf1ation-
the Treasury plans to borrow $780,
900 100000 this year. OF this about
$40, 1000 900 900 is to refund maturing
issues-borrowing from Peter to pay
Peter. That leaves about $70,000,-
00c 900 in new money to be raised.
The Treasury contemplates in a
years time three or four campaigns
such as the one starting today,
On the home front every good citi-
zen will have to pitch in three or
four times year to put these bond
campaigns over.
Eight Billions From Public.
OF this S13,O0O,OO0,OO0 that your
Government will borrow in this
campaign it is anticipated that
$1,000 OOO.OOO will come from the pub
lie and $4,000 100000 will come from
the banks. 1t is the money that
comes from the public, not the
money that comes from the banks,
that is important in the imitation
fight behind the lines.
When banks buy bonds, the pur-
chase does not change their amounts
on deposit at the time. The Gov
ernment takes the money loaned
it from the banks reserves and
spends it making munitions. 1t
comes back to the banks from pay
rolls, and other expenditures for
war production to swell the deposits
the spendable sum that constitute
the threat of imitation.
When the public buys bonds 1t
does so by checking out its deposits
to that extent. When the Govern
ment spends this money in manner
that results in payrolls, business ac-
counts and profits, it comes back
to the banks to take the place of de-
posits checked out for the purchase
of bonds-not in the form of new
money piling up on top of the al
ready tremendous deposits.
War Costs Are Fantastic.
The costs of conducting total war
on a global scale are fantastic. 1t
is estimated that the Government
will spend in the year starting next
July /, 100000 OO0,OOOs BY June
we will be spending $2,OO0,O00, 900 a
week. At that rate the entire cost
of the Civil War will be exceeded
every 10 days and the entire cost of
the last war exceeded by eXpendi-
lures of six months.
This entire sum could be raised
through the sale OF bonds to the
banking system of the country But
this would be creating new money.
No one would be giving up the
wherewithal to buy anything for the
time being. Instead, the power to
buy would be increased when the
volume of goods to be purchased is
on the decrease Despite the at
tempt at controls, prices of every
thing would be likely to skyrocket.
Total bank deposits and currency
outstanding at the end of 1912 were
at new high, almost 100000, 900 600
-$99, 400 100000 to be more exact
This was comprised of $48, 900 ,000, 900
in demand deposits-your checking
accounts 200, 900 900 in time de-
posits-your savings accounts-s13,-
300 100000 in currency in the hands
of the public, and $8,500,00 900 in
Government deposits.
All this money-more than we
have ever known before-is worth
something today due to the measure
of success we have had in controlling
prices. With the Government soon
to be spending more than s2,00O,-
100000 a Week-lets take a look at