been repudiated. The money borrowed has always been repaid. The United States has the lowest per capita debt of any great nation. States Lib 2. Security of income.-The return upon the How the principal invested is the income or interest. The United interest on these bonds is a part of the Govern- erty Bonds ment's expense. Should the power of our Govern- meet all the ment fail, not even cash would be of value, so high is of a Good our standing. Essentials Investment. 3. Fair income return.-Four per cent for such high-grade security is a fair return. But in addition these bonds bear the privilege of convertibility into a higher rate of interest if the Government has to borrow more money at a higher rate. 4. Marketability.-The United States bonds are very active in the open market. Those offered for sale find a purchaser more quickly than any other securities. Bond houses and banks handle them as readily as cash. These bonds can be sold at any time and in any bank or trust company throughout this entire country. 5. Value as collateral.-They have the greatest value as collateral of any security, because the credit of the United States Government is the highest of any Nation. Banks or individuals will readily loan money on such security. 6. Tax exemption.-The Government bonds of the second Liberty loan are exempt as to principal and interest from all taxation by the United States, any State or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (b) United States graduated additional income taxes, commonly known as surtaxes, and excess profits and war profits taxes. The interest on an amount of bonds and certificates authorized by said act, the principal of which does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation, shall be exempt from the taxes provided for in clause (b) above. 7. Freedom from care.--Bonds can be registered in the name of the holder and the interest thereon will be sent them every six months direct from the Government. 8. Acceptable duration. The period of time over which a loan continues is in the case of the Liberty loan bonds of great advantage. If bought by a young person the repayment will probably be made within his or her lifetime; if by an older person, the money will be repaid to his or her heirs. 9. Acceptable denomination.-These bonds are issued in denominations of $50, $100, $500, $1,000, and multiples of $1,000; therefore they meet the requirements of small and large investors. 10. Potential appreciation. There is every reason to believe that these bonds will increase in value after the war is over, to judge by the fact that in the past war bonds did increase in value at the close of the war. In the event of the war ending within a short time these bonds would increase in value because of certain tax exemptions. Therefore people of wealth will want to invest in them and small holders will probably be able to sell at a profit. In the event of the continuation of the war over a long period a higher rate of interest will have to be paid, and this maintains the value of the bond. pon and BONDS, COUPON AND REGISTERED. Technically a bond is a promise to pay. A person buys a bond; that is, he lends his money to an organization and in return he receives an engraved paper receipt called a bond. A part of this bond bears the terms of the loan. It states that $50, $100, $500, $1000 or more has been borrowed from the buyer of the Bonds, Cou- bond for a stated period of years at a certain rate of interest, this interest to be paid on dates stated Registered. in the bond. The interest is usually paid twice a year. Attached to the bond are the coupons. These represent the interest. Beginning with the first date on which interest is due, these bear the date and the amount of money to be paid. If the bond was issued June 15, 1917, for $100 at 33 per cent, the first coupon would state that on December 15, 1917, $1.75 would be paid to the bearer. This coupon could be deposited or cashed at any bank. If a bond is registered the owner receives a receipt for his money, the bond is held by the organization issuing it, and the interest is paid to the owner by check. Coupon bonds are payable to bearer and should be kept in a safe deposit box because they are almost the same as cash. The registering of a bond relieves the owner of the responsibility of taking care of it, though he must take care of his receipt. LIBERTY BONDS PREFERRED STOCK. Likening the United States to a great corporation with more than a hundred million stockholders and with capital stock and resources of more than $250,000,000,000 and an annual income of $50,000,000,000, each American citizen is a stockholder in this great corporation. Even those whose only assets Liberty are their earning capacity own shares in our public Bonds Predomain and property and are working on a profitsharing basis, with a vote and a voice in the management of the corporation and with the right to acquire more stock at any time. ferred Stock A Liberty Loan Bond may be likened to a share of preferred stock in this gigantic corporation. Like preferred stock in other corporations, it may not return, at times, so large a dividend as common stock, but the dividend from it is certain and sure. It is stock that pays 4 per cent dividend, and while in some years crop failures may decrease the farmer's dividend from his land to less than nothing and various causes may lessen or destroy dividends from all other sorts of property, the dividend from the Liberty Loan Bond is certain and sure, subject to no failure. The owner of a Liberty Loan Bond holds written tangible evidence of being a preferred stockholder in the United States, the greatest, the most glorious, the most honorable, and the most successful corporation in the world. He holds the certificate of being a citizen willing to support his Government and to lend money to his country when it needs and calls for it. OUR OPPORTUNITY-W. S. S. In the preceding chapters we have learned how the great war came to America, something of what America's part is to be in keeping alight the fires of liberty for the future generations, and in preserving our Christian civilization victorious over a culture founded on brute force and dedicated to the exaltation of an earthly prince. What is required of us in man strength and what is being done in the actual raising, preparation and training of an army and navy has been referred to; the tremendous task of supplying and equipping not only our own forces but those of our allies has been touched upon; and brief reference has been made to the humane work of relief so nobly performed by the Red Cross and other agencies. The mere money cost of it all, the staggering totals of millions, of billions, has brought home again to us the hugeness of the task that lies ahead and has brought to us strongly the lesson that by thrift alone can these material requirements be met. Reference has been made to the peace time power of thrift and to the ordinary investments open to man for the laying by of their surplus earnings. And now remains the task of applying the lessons of thrift to the work before us. For the government has made it possible for each one of us, each individual man and woman, each boy and girl in the United States to aid effectively in the prosecution of our war upon the German Imperial Government. Congress has provided that there shall be loaned to the government the sum of Vanderlip two billion dollars. This money is to be loaned by the people through the purchase by them of war savings stamps. In an interview printed in the Saturday Evening Post, Frank A. Vanderlip, chairman of the War Savings Committee, describes the war savings stamps as follows: "They are designed to give every man, woman and child in the United States the opportunity to aid the Government in financing the war. The unit is five dollars; but instead of loaning the Government five dollars and getting a semi-annual interest return of ten cents a much better plan has been devised for the small investor: Beginning December 1, 1917, the OUR OPPORTUNITY-W. S. S. 75 Government will offer a war-savings-certificate stamp, which it will sell in December, 1917, and in January, 1918, for $4.12. This obligation is in effect the Government's note for five dollars, falling due January 1, 1923; and the buyer who, during the coming December or January, purchases for $4.12 one of these five-dollar war-savings certificates is virtually discounting the Government's note for five dollars-discounting it at four per cent interest, compounded quarterly. In other words, Uncle Sam says to the citizen: 'Lend me $4.12, Uncle Sam and in return I will give you a stamp which is my and the promise to pay. I will use your $4.12 to prosecute the war and meet the expenses of Government, and will pay you four per cent interest, compounded quarterly. Thus, when January 1, 1923 rolls round, I will hand you back the money you helped me out with, plus the interest; so that-speaking approximately, and ignoring, in our liberal American way, the few odd cents for every four dollars you lend me now, when I need it, I'll give you back five dollars five years hence.' "But,' we can imagine the citizen saying to Uncle Sam, 'don't you want me to lend you more than $4.12?' Citizen. "Of course I do!' says Uncle Sam. 'I want you to let me have all you can spare throughout the coming year.' ""Indeed I will!' says the citizen. 'I can let you have $4.12 in December, 1917; $4.12 more in January, 1918; $4.12 more in February, and "No,' says Uncle Sam; '$4.12 is all right for December and January, but on the first of every month after January I shall have to raise the price of the stamps one cent. They will cost you $4.13 each during February, $4.14 during March, $4.15 during April, and so on.' ""There's only one question that troubles me,' says the citizen; 'I don't quite like the idea of tying up my savings for five years. Suppose I need some of this money between now and January 1, 1923?' ""That's all looked after,' says Uncle Sam. 'In the event of your having to use the money which you will have loaned me you can go to any post office and get back the amount you have paid, plus one cent a month, for each stamp you have bought. I'll only ask you to give the post office ten days' notice so that funds may always be on hand to meet any demands made. Aside from this, you are free, if it becomes necessary, to draw your money from any one of my ten thousand money-order post offices.'" |