Liberty Loan

“ While the great sums subscribed for the Fourth Loan by banks, corporations, and individuals had a spectacular interest, observed the New York World, it was the plain people who made the loan a conspicuous success, and the twenty-one million subscribers mean in effect the purchase of a new Liberty Bond by "every American family." ”

“ Well, the Liberty Loan now offers the chance to make the people and the bondholders interchangeable terms. The bonds are issued in such a way that the farmer and the wage-worker have exactly the same chance as the banker to purchase and hold as [13] many or as few as they wish. No matter how small a man’s means, he can get some part of a bond if he wishes. ”

“ The Government's efforts to brace popular interest in the loan, aided by hundreds of thousands of voluntary workers throughout the country who formed Liberty Loan organizations, bankers, boy scouts, girl scouts, the newspapers and magazines, and patriotic, commercial, and fraternal bodies, produced a flood of subscriptions at the last moment which dissipated all fear of failure. The people needed driving, knew that their procrastination called for a dinning advertising campaign to translate intentions into deeds, and finally yielded good-humoredly to the impetus. ”

“ LIBERTY LOANS AND THRIFT
One of the best methods of testing the influence of Liberty Loan activities on the thrift of the country is used by Bradstreet's in its examination of the annual report of the United States League of Building and Loan Associations. These Associations, be it remembered, are not patronized by capitalists but almost wholly by wage earners. During the past fifteen years the membership of building and loan associations has increased 150 percent. ”

“ The circumstances of the loan have proved beyond a doubt three capital points, which, if they are properly used, may be advantageous to the future liberty and happiness of mankind. In the first place, the loan demonstrates, in regard to instrumental resources, the competency of this kingdom to the assertion of the common cause, and to the maintenance and superintendence of that which it is its duty and its glory to hold and to watch over,—the balance of power throughout the Christian world. ”

“ The saving of interest, too, on the sum so to be bought, may be applied in buying up more principal, and thereby keep this salutary operation going.
I would only take the liberty of suggesting the insertion of some such clause as the following, into the instructions: "The agents to be employed shall never open a loan for more than one million of dollars at a time, nor open a new loan till the preceding 508 one has been filled, and expressly approved by the President of the United States." ”

“ And the same must be said of the value at which they have reckoned the short annuity of a half per cent. for ten years annexed to the new 4 per cents. In forming the scheme for the last loan this annuity was, I have said, estimated at 81⁄10 years purchase, agreeably to its real value, supposing the payments yearly, the first payment to be made at the distance of a year, and money improved at 4 per cent. compound interest. But it has in general been sold at about 71⁄2 years purchase; which is less than its value, supposing money improved at 51⁄2 per cent. compound interest. ”

“ Nobody expects that we can pay as fast as the debt matures, but we shall be compelled to go into the market and negotiate new loans. Let this system of taxation be pursued; let another Congress put the tax at twenty per cent., another at forty per cent., and another at fifty per cent., or one hundred per cent.; let the principle once be adopted—the rate is only a question of discretion—and where will you be able to negotiate a loan except at the most ruinous sacrifice? Let such legislation prevail as the gentleman urges, and can we look any man in the face and ask him to loan us money? ”

“ You are to set forth, in compact form and in the most effective way possible, the facts of the case and the considerations that demand a popular or at least a public loan instead of this deal with a syndicate, suggestive as it is of the patent falsehood that the United States Treasury's credit needs ' financing.' You are to declare, with all possible emphasis, that the banks, bankers, and people of the United States stand ready and eager to lend their government all the money it wants at three per cent, interest, and to buy its four per cent, bonds at a premium that will amount to that. ”

“ The intention of permitting loans upon interest, is not to provide a revenue to those who have ready money locked up, but to obtain the use of a circulating equivalent to those who have a sufficient security to pledge for it. If the statesman, therefore, shall find himself withheld by the canons of his church, from drawing the coin of his subjects into circulation, by permitting the loan of it upon interest, nothing is more easy than to invent another species of circulation, where no interest at all is necessary. ”

“ That the best policy to diminish our burden of debt is to so improve our credit that capitalists will seek to loan us money at lower rates of interest than we now pay, and must continue to pay, so long as repudiation, partial or total, open or covert, is threatened or suspected. ”

“ Among the admitted powers which the act in question is believed to aid in executing, are the powers of borrowing money on the credit of the United States, of declaring war, of suppressing insurrection, of raising and supporting armies, and of providing and maintaining a navy. The power to borrow money carries with it the power to give to the lender an evidence of the debt thus created, and to strengthen the loan with incidents and adjuncts making it the more attractive in the market. ”

“ They asked that their loan be perpetual, like the English loan; that they should be freed from the burdens of the government; that their loan should be free from taxation; that they should receive their interest semi-annually, and not in the common legal tender, but in coin; that they be permitted to issue their own notes as currency to be loaned to their customers; that the government discredit its own issues and endorse theirs; and that they be given a monopoly by taxing out of existence all opposition. ”

“ He has thought that he should partly fulfil this object, by securing the payment of the interest on the loans, which have been stipulated to be paid in France, presuming that the credit of one of the public funds of the States would effectually 287 contribute to the support of the others, and to the success of the measures, which the wisdom of Congress may adopt on this subject. A society of bankers, established under the authority of the King, has consequently taken upon itself to make the necessary advances, in the form of a loan made to America. ”

“ If they are competent to do their other business for themselves, government pays their capacity a poor compliment in undertaking to help them in the single matter of making loans; and the borrowers in turn have reason to pray to be delivered from their friends, since they, of all others, would be the men especially injured if all the lenders obeyed the usury laws. Suppose that a borrower is in great need of a loan, and that for some reason his credit is now a little weak. ”

“ Financial measures, of various kinds, for borrowing money to supply the wants of the treasury, beyond the receipts from taxation and the sales of the public lands, have been adopted by the government since the United States became an independent nation. Subscriptions for a loan of twelve millions of dollars were, on the 4th of August, 1790, directed to be opened at the treasury, to be made payable in certificates issued for the debt according to their specie value. ”

“ Why 36should not all the interest that is now paid to individuals and banks for private loans, be paid to the Government? It is estimated that the average amount of private loans for the whole country is not less than $5,000,000,000 upon which, at even 6 per cent. interest, the people are taxed $300,000,000. Is there any valid reason why the Government should not loan this money and receive this interest? Yes, for if it did, the rich could not live in luxurious idleness, while the poor are obliged to labour twice the natural time to subsist the world.
WHY DO THE PEOPLE PAY INTEREST? ”

“ If, instead of calling for these deposits, it should be deemed advisable to pledge them for the repayment of any money the government might find it necessary to borrow, a loan contracted on such a basis of security, superadding to the plighted faith of the United States that of the individual states, could hardly fail to be acceptable to capitalists. ”

“ Every kind of loan proves infirmity in the State and a want of understanding of the rights of the State. Loans hang like a sword of Damocles over the heads of rulers, who, instead of taking from their subjects by a temporary tax, come begging with oustretched palm of our bankers. Foreign loans are leeches which there is no possibility of removing from the body of the State until they fall off of themselves or the State flings them off. ”

“ If it be then allowed, that the loan upon interest is a good political institution, relative to the present situation of European societies, the next question is, to determine a proper standard for it, so as to avoid the oppression of usurers, on one hand, and on the other, to allow such a reasonable profit to the lender, as may engage him to throw his money into circulation for the common advantage. ”

“ It should be remembered here, that tho’ Government, when its debts are at a discount, may be able, with the consent of the creditors, to redeem a given capital by paying a less sum than that capital; yet it can never be obliged to pay more.—In other words; a 100l. capital in the 3 per cents; 31⁄2 per cents; or 4, or 5 per cents, Government is always at liberty to redeem by paying 100l. ”

“ For who will give ninety-six per cent, for the foreign obligations of the same nation, whose domestic ones can be bought at the same market for fifty-five per cent.; the former, too, bearing an interest of only five per cent., while the latter yields six. If any discouragements can be honestly thrown on this transfer, it would seem advisable, in order to keep the domestic debt at home. It would be a very effectual one, if, instead of the title existing in our treasury books alone, it was made to exist in loose papers, as our loan office debts do. ”

“ Public credit we have defined to be, the confidence reposed in a state, or body politic, borrowing money, on condition that the capital shall not be demandable, but that a certain proportional part of the sum shall be annually paid, either in lieu of interest, or in extinction of part of the capital; for the security of which payment, a permanent annual fund is appropriated, with a liberty, however, to the state to set itself free, by repaying the whole, when nothing to the contrary is stipulated. ”

“ But at present, when we see so many people employed in providing stores of necessaries for others, which, without money, could not be done; forbidding the loan upon interest, has the effect of locking up the very instrument (money) which is necessary for supplying the wants of the society. The loan, therefore, upon interest, as society now stands composed, is established, not in favour of the lenders, but of the whole community ”

“ In hopes of saving the ryot from this extortion, the Government has devised agricultural banks and other schemes for advancing loans at the reasonable interest of 5 per cent., and in course of time this benefit will probably increase. But at present the economists, as usual, have made the mistake of omitting the uncertain element in man, and he yet continues to prefer his familiar old money-lender to the most advantageous Government loan. ”

“ And the result of an examination of only a part of the public loans, will be found to be, “that a capital of more than TWENTY MILLIONS has been a needless addition to the public debt, for which no money, or any sort of equivalent has been received; and which might have been avoided, together with a great expence of interest, by only forming differently the schemes of the public loans.” ”

“ The foreign debt comprehends, 1, the loan from the government of Spain; 2, the loans from the government of France, and from the Farmers General; 3, the loans negotiated in Holland, by order of Congress. This branch of our debt stands absolutely singular; no man in the United States having ever supposed that Congress, or their legislatures, can, in any wise, modify or alter it. They justly view the United States as the one party, and the lenders as the other, and that the consent of both would be requisite, were any modification 472 to be proposed. ”

“ The financial articles established sinking funds for both the canal and general fund debt, forbade the loan of the credit of the State, and limited rigidly the power of the legislature to create debts, except to repel invasion or suppress insurrection, and declared the school and literature funds inviolate. Provision was made for general laws for the formation of corporations. The constitution required the submission to the people once every twenty years of the question whether a convention shall be called or not. ”

“ We are accustomed to buy and sell Debts payable on a certain day and at a certain event. The fundamental law of the present national banks of the United States explicitly recognizes this old and good distinction by requiring the banks to loan money on personal security only, that is to say, no tangible things, not even real estate, may be taken as original security for any loan. ”

“ There is not a man among you who cannot without hardship purchase at least one fifty-dollar bond. Many of you can invest thousands. Yet we are approaching our time limit and, so far, less than two hundred thousand dollars' worth of these magnificent Liberty Bonds have been purchased in our community! But five days remain to us to subscribe the remaining eight hundred thousand dollars, and thereby preserve the honor of our fair city. That eight hundred thousand dollars will be subscribed! ”