a^' ii^ M; ^« ■^''1';^^" CO ^'■^ 9 1/7 fts- 1917 The date shows when this volume was taken. To renew this book copy the call No. and give to thehbraria^. HOME USE RULES All Books subject to Recall All borrowers must regis- terin the library to borrow books for home use. All books must be re- turned at end of college year ^or inspection and repairs. Limited books must be re- turned within the four week limit .and not renewed. Students must return all books before leaving town. 7 Officers should arrange for the return of books wanted during their absence from town. Volumes of periodicals and of pamphlets are held in' the library as much as " " possible. For special pur- poses they are given out for " ■" a limited time. ..,.„ ^. Borrowers should not use their , library privileges for « the benefit of other persons. Books of special value and gift books, when the grver wishes it, are not allowed to circulate. -«» - »....« Readers are asked l^o re- port all cases of bcx>ks ■ —."."•• marked or mutilated. ' Do not deface books by marks and writing. THE SECOND LIBERTY LOAN OF 1917 A SOURCE BOOK PUBLISHED BY THE TREASURY DEPARTMENT PUBLICITY BUREAU : : WASHINGTON, D. C. • >;i WASHINGTON GOVERNMENT PRINTING OFFICE 1917 3 i^'PlA^ /i PREFATORY NOTE. Our Government has authorized the Secretary of the Treasury to float a Second Liberty Loan. This means that the people of the United States are called upon to support President Wilson and Congress by lending money to their Government to carry on the war. Our unprecedented expenditures /or the physical, mental, and moral well-being of the soldiers will be historic. They testify to the personal attitude of a Democracy toward those who risk their hves for Country and Hiunanity. With an ever-growing behef in the righteousness of the cause for which America is in the war, the people stand ready to help. They must, however, do their part intelligently as well as patriotically. The Secretary of the Treasury will need the generous assistance of thousands in disseminating reliable information throughout the villages, towns, and cities — information as to the security of Liberty Loan Bonds and the urgent need for hearty, speedy subscriptions to the Loan. This Source Book has been prepared for use by those who will aid the Government by addressing audiences on the subject of the Second Liberty Loan. The information it contains is official and of interest to people in all sections of the United States. If local information is desired by speakers, they wiU find their District Liberty Loan Committee ready to furnish all that is obtainable and accurate. The First Liberty Loan advanced the number of bondholders from 300,000 to more than 5,000,000. To secure a larger number of buy- ers will try the tact, perseverance and enthusiasm of those who en- deavor to assist in promoting the sale of the bonds. That will not deter anyone from undertaking to be of service to our Country. One thing necessary to make the Loan a success is the realization by all people that America is fighting in self-defense, and in defense of the best form of government the world has yet seen — government by the people. Speakers who can arouse in the minds of their audiences the American faith in the People's Government, can certainly convince their hearers of the necessity that each one help in financing the People's War. Oscar A. Price, Director of Publicity. Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/cletails/cu31924030228385 TABLE OF CONTENTS Page. I. The Second Liberty Loan of 1917 1-2 What it is. How a person buys one or more of its bonds. Where subscription blanks may be had. When the bonds aie offered for sale. II. Why the Government needs large aums of money for the war 4-14 War expenditures until June 30, 1918, as estimated by the Secretary of the Treasury and in legislation by Congress. War expenditures of other Nations. Expenditures of the United States in former wars. Cost of equipment, transportation, and rations of United States Army in 1917. Some business details outlined by Hon. Newton D. Baker, Secre- tary of War. III. Resources of the United States 15-17 In 1912— Agriculture, live stock, manufacturing, and mining. Transportation, telegraph, and telephone systems. Real property, privately owned enterprises, et cetera. In 1916: Exports, bank resources, crops, et cetera. In 1917: Incomes, surplus profits, et cetera. History of First Liberty Loan. IV. How to raise money for war expenditures 18, 19 By Government taxation. By the people investing their savings in Liberty Loan Bonds. V. What a bond means, especially a Liberty Bond 20-30 Description and classification. Safety of Liberty Loans and their bonds. Buyers of bonds. VI. How we were forced into the war 31-33 Stated in the preamble and the resolution adopted April 6, 1917, by the Senate and House of Representatives. Explained by President Wilson, (a) In his address on Flag Day. (6) In his acknowledgment of the communication of Benodic- tus XV, Pope. VII. Why this is our war 34r-38 Severance of our relations with Germany. Reasons as given in an address by Hon. W. G. McAdoo, Secretaiy of the Treasury. Reasons stated ia an address by Hon. Franklin K. Lane, Secretary of the Interior. Question answered in an address by Hon. William B. Wilson, Secre- tary of Labor. v VX TABLE OF CONTENTS. 39-45 VIII. What victory by Germany would mean Reviewed by Hon. Robert Lansing, Secretary of State. Indicated by Hon. Louis F. Post, Assistant Secretary of Labor .^ Described by Hon. Elihu Root, chairman of Commission to Russia. IX. Our aims 46, 47 Definitely stated in addresses by President Wilson. X. Aims of the Allies 48-50 As expressed by members of foreign missions who have come to the United States since our declaration of a state of war. XI. Patriotism — Its appeals and its demands 51-55 XII. Important data 56, 57 Nations now at war with Germany or her allies. Nations that have broken off diplomatic relations with Germany. Dates of declarations of war in 1914, 1915, 1916, 1917. I. THE SECOND LIBERTY LOAN OF 1917. What it is. Our soldiers are giving their lives. The Govern- ment asks us to lend our money, with the best security in the world, at a fair rate of interest. This is a loan for the protection of the people of the United States. We all must save and serve in order that our country may defeat our enemy and win the victory. The Government is asking for a second loan in order adequately to equip and maintain our Army and Navy. It is our duty to give aid to the extent of om* abihty. 1. Amount: The Secretary of the Treasury is inviting subscriptions for $3,000,000,000, and reserves the right to allot additional bonds up to one-halt the amount of any over subscription. 2. Security: The total credit of the Government and the people of the United States of America. 3. Interest: Four per cent, payable May 15 and November 15. 4. Denominations: (a) Bearer or coupon bonds, 150, $100, $500, $1,000, $5,000, and $10,000. (6) Registered bonds, $50, $100, $500, $1,000, $5,000, $10,000, $50,000, and $100,000. 5. Exemption from taxes: 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 (6) 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 (6) above. 6. Maturity: The bonds will mature, that is, be paid, on or before November 15, 1942, but the Government has the privilege of paying oft the issue in whole or in part on or after November 15, 1927. _ 7. Conversion: If bonds bearing a higher rate of interest are issued later, the holders of these bonds are entitled to exchange them under certain conditions for new bonds bearing the higher rate. How a person In order t^ buy a bond it is necessary to apply at buys one or more one of the places mentioned below. Aa application "* ^*^ bonds. ^ blank is given the apphcant to sign and any questions concerning the information printed thereon will be answered where the bond is purchased. Where sub- Subscription blanks may be obtained at the Treas- scription blanks ury Department, Washington, the subtreasuries, the "^^^ be had. Federal reserve banks and their branches, post offices, national banks, State banks, trust companies, private bankers, invest- ment bankers, bond and stock houses, express companies, news- papers, department stores, and many other private firms and organiza- tions of both men and women. No commission is charged by any agency selling these Government War Bonds. Payment may be made by money order or certified check. The Treasury circular No . 90 gives 1 2 THE SECOND LIBBBTY LOAN OF 191"?. all official details and may be obtained from the Treasury Department and Federal reserve banks or other agencies. Wh en th e bonds are of- Application blanks should be signed early enough to fered for sale, reach the Treasury Department, a Federal reserve bank, or some incorporated bank or trust company, by the close of business October 27, 1917. The Government reserves the right to close the subscription list earlier. Payments will be required by Government agents as follows: 2 per cent on application. 18 per cent on November 15, 1917. 40 per cent on December 16, 1917. 40 per cent on January 15, 1918. Subscribers w;ho do not apply for more than $1,000 may pay in lull on application if they desire, but interest on these bonds wiU not begm until November 15, 1917. Those subscribing for lareer amounts may complete payments on any due date. ■ II. WHY THE GOVERNMENT NEEDS LARGE SUMS OF MONEY FOR THE WAR. "The first ne- Money is the problem now. What must America cessity— money," do to meet it? Wars can not be fought without ?°°L^^ ^^"^^n money. The very first step in this war, the most McAdoo.' ' ' effective step that we could take, was to provide the money for its conduct. The Congress quickly passed an act authorizing a credit of $5,538,945,460, and empowered the Secre- tary of the Treasury, with the approval of the President, to extend to the allied Governments making war with us against the enemies of our country, credits not exceeding $3,000,000,000. Since that law was passed — it was passed on the 2iux of April — the financial machinery of our Government has been speeded up to top notch to give relief to the Allies in Europe, in order that they might be able to make their units in the trenches, their machinery which is there on the ground, teU to the utmost, and tell, if possible, so effectively that it might not be necessary to send American soldiers to the battle fields. As a result, we have already extended in credits to these Govern- ments — Great Britain, France, Italy, Russia, and Belgium — some- thing hke $745,000,000, and we shall have to extend before this year is out, if the war lasts that long, not $3,000,000,000 of credits, but probably five billions or six billions. We are extending credit for a service which is essential for our own protection even if no other grave issues were involved in this struggle. Very little of this money is going out of the country. All of tms financing is largely a matter of shifting credits; it is not going to involve any loss of gold; it is not foing to involve any loss of values. This money is going to be put ack into circulation, put back promptly into the channels of business and circulated and recirculated to take care of the abnormal pros- perity of the country, a prosperity that will be greater in the present year than ever before in our history. As we sell these bonds we take back from the foreign governments, under the terms of the act, their obligations, having practically the same maturity as ours, bearing the same rate of interest as ours, so that as their obligations mature the proceeds will be employed to pay off the obligations issued by this Government to provide them with credit. So you can see that in extending credit to our AUies we are not giving anything to them. So far as that is concerned, for the purposes of this war, we should be willing to give them anything to gam success; but they don't ask that. They are glad and grateful that the American Gov- ernment is willing to give them the benefit of its matchless credit, a credit greater and stronger than that of any other nation on the face of the globe. We give them credit at the same price our Government has to pay to you, its people, for the use of the money, because we do not want to make any profit on our AlHes. We do not want to profit 3 4 THE SECOND LIBERTY LOAN OP 1911. by the blood that they must shed upon the battle field in the same cause in which we are engaged. The cost of wars to other nations. Dates. 1793-1815 1812-1815 1828 1830-1840 1830-1847 1848 1854-1856 Countries engaged. England and France France and Russia Eussia and Turkey Spain and Portugal (civil war) France and Algeria Revolts in Europe England France Sardinia and Turkej"" Austria Russia France Austria Italy Cost. S6, 260, 000, 000 450, 625, 000 100, 000, 000 250,000,000 190,000,000 60,000,000 371,000,000 332, 000, 000 128,000,000 68, 600, 000 800,000,000 75,000,000 127,000,000 61,000,0M 1864-1870 1865-1866 1870-1871 1876-1877 1900-1901 1904-1905 Countries engaged. Denmai-k, Prussia, and Austria Prussia and Austria Brazil, Argentina, and France and Mexico /Germany \France /Russia \Tm'key Transvaal Republic and England Russia and Japan Cost. 836,000,000 330, 000, 000 240,000,000 66,000,000 954, 400, 006 1,680,000,000 806, 547, 489 403, 273, 745 1,000,100,000 2,600,000,000 Expense of wars, 1793-1860 ?9, 243, 225, 000 Expense of wars, 1861-1910 14, 080, 321, 240 Total. 23, 323, 546, 240 The cost of the Balkan wars 1, 264, 000, 000 Expenditures by the United States informer wars.^ WAR OF 1812 WITH GREAT BRITAIN, FROM JUNE 18, 1812, TO FEB. 17, 1815. Year. Total. War. Navy. 1812 J20,280,000 31,681,000 34,720,000 32,943,000 $11,817,000 19,652,000 20,350,000 14,794,000 $3,959,008 1813 6,446,000 1814 7,311,000 1815 8,660,000 WAR WITH MEXICO, FROM APR. 24, 1846, TO JULY 4, 1848. 1846, 1847, 1848. 1849, $27,261,000 54, 920, 000 47, 618, 000 43, 499,000 $10,413,000 35,840,000 27, 688, 000 14,558,000 $6,455,000 7,900,000- 9,408,000 9, 786, 000 CIVIL WAR, FROM 1861 TO 1865. 1860. 1861, 1862, 1863, 1864, 1865, 363,201,000 66,650,000 469,569,000 718, 733, 000 864,968,000 1,295,099,000 $16,472,000 23,001,000 389, 173, 000 603,314,000 690,391,000 1,030,690,000 $11,514,000 12,387,000 42,640,000 63,261,000 85,705,000 122,617,000 SPANISH-AMERICAN WAR, FROM APR. 21, 1898, TO DEC. 10, 1897, 1898, 1899, 1900, $366,774,000 443,308,000 605,071,000 487,713,000 $48,950,000 91, 992, 000 229, 841, 000 134, 774, 000 $34,561,000 58,823,000 63,942,000 55,963,000 1 The sum of tlie expenditures of the Army and Navy do not equal the total given above. The difEereuoe was used for other Government expenses connected with the war. THE SECOND LIBERTY LOAN OE 1911. Cost of present European war to Aug. 1, 1917. ENTENTE ALLIES. Expenditures. United ICiugdom France 1 Eussia Italy United States Other Allies Total Less advances to their allies and dominions Net total TEUTONIC ALLIANCE. Germany instria-Himgary Bolgaria and Turkey Total Less advances to their allies and dominions Net cost GEAND TOTAL. Aggregate. t26, 705, 000, 000 18,630,000,000 14,260,000,000 6,060,000,000 l,u29,000,000 3,260,000,000 ■■/, m, 000, 000 1,992,600,000 69,421,500,000 Present daily. $25,000,000 18, 600, 000 15, 000, 000 7, 000, 000 19,100,000 5,000,000 99, 600, 000 22,900,000 76,700,000 $19,760,000,000 9,700,000,000 1,450,000,000 30, 900, 000, OOO 600,000,000 30, 300, 000, 000 $25,000,000 13,000,000 2,000,000 40,000,000 40,000,000 Entente allies $69,421,600,000 30,300,000,000 $76,700,000 40, 000, 000 89, 721, 600, 000 116,700,000 The cost of war The estimated ordinary expenses of this Govern- to the iTnited ment in the first year of its participation in the war states. is $12,067,278,679.07. This does not include a penny of what we have lent and are going to lend to our Allies. It is merely the sum to be spent, with no financial return, on the running of the Govern- ment in war time, including, of course, the expense of the greatly enlarged Army and Navy on the new war footing. This total for the present year is $27,807,000 more than the Government spent in the entire 17 years from the beginning of the present century to the present year. Ordinary expenditures of this Government last year, that is, the fiscal year ended June 30, 1917, were $1,041,635,116, or about a tenth of what they are now estimated to reach in the present twelvemonth. In addition, last year there were various extraordinary expenditures, such as $25,000,000 for the Danish West Indies, but they do not belong in the group of ordinary expenses to which the estimate of more than ten billions is contrasted. Only onco before in the history of the Government had the ordinary expenses exceeded a biUion, and that was in the last year of the Civil War. In these totals of expendi- tures of previous years the deficits due to Postal Service and the expenditures for bond redemptions are not included, for those items are not included in the estimate of more than ten bilhons for the current war year. Interest payments on bonds are included. The accompanying tables on pages 7-10, showing the estimates of all Government departments for the next 12 months, were prepared 6 THE SECOND LIBERTY LOAN OF 1917. by William G. McAdoo, Secretary of the Treasury, for the ^idance of the Senate Committee on Finance and the House Committee on Ways and Means. It will be seen that the two items for the Army and Navy expendi- tures for one year of this European war amount to $9,064,240,483, just about two and a half times as much as it cost to keep the Army and Navy going through practically 17 years of fighting in the five previous wars of this country which were of importance. In other words, the cost of both branches of the fighting service for the War of 1812, the second Seminole war, the Mexican War, the Civil War, and the Spanish War was, all told, $3,743,776,773. Against this estimate of "ordinary" Government expenses for the year ending June, 1918, which, to be exact as to cents, is $12,067,278,679.07, there are to offset it in estimated receipts on the basis of existing laws $1,333,500,000; also $2,000,000,000 of the $5,538,945,460 bond issue authorized on April 27; and furthermore, $393,500,000 of the estimated ten bilUons of expenditures are reim- bursable by bond issue. That is, there are $3,727,000,000 of receipts in sight, leaving an excess of estimated expenditures over receipts already assured of $7,008,807,000. From that excess there will be deducted later the amount to be raised by the war-revenue bill. THE SECOND LIBERTY LOAN" OF 1917. S8SS siss _oo ooo 8 SS SSSSBBSg II oi> OOO^QOOQ r-Q»OOOOOQO S5 '^" Soooo oooo 0"*iO U30 USi-H 000(0000? OOOT •fl'(D'>3i rliH i o o a. •a s e I s I hs. il HP, tHO Pi t-.Oi-H.-( (ocncooa OO'eD'o'-^ Ot-O**! ooo CO-TJIO Oit-O eokoooci ascQoooc 1-1 coco ^ S2 ses°°<="="=» (D oo oooooooo 1-4 oo c5odooodd gi oo t>. O Q 00 O tP 00 Q oo O ■V -( CO >o tH M Q »o i-i m5 rH Of- iH OPfll> M«D Wt-( TjT oTt-^ occ'co"(o"-ai" i-Tin* *; "S a. SI. "> .£o SS3 'Q.i-i.p g ffl«M s n *" S t> O '^ * " -t^ ■•d 3 a s i.gg lis THE SECOND LIBEETY LOAN OP IW?. o oo ooo CO o in oooio OCO CD ocq tx) ■moo MOO cooo I>.eo»0 o ooo oio oo oasoo 'cTo'o'io' t>.«00(N 00(O»OOS -a'WOOOOC oeooocJoo eOCOOW OQ>H lOMOOiOOOi orci(rco"of cTq 06" CO i-H 00 f- CO O .-I iH CO >0 C* 00 10 iH 8 S ■3 CO 05D CO O N ScoE^Tfi o eo CO 0>E^ O t— i>,Tj-oc*]C^'j< c^cocoM'^^ooffi03^^OT3! 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S888S88SSSS TpSogSScSoiQQO ■ni t* Ofl © 1JH »o lO OOOOOOOOOO Q<00»OOQQ»00(0 §0000000 QOggOQQ 0000000 o''o"Q'io'o"Q'''^">n' usooc-oiSpon SSS88Si 8888888888 U5OJ00I>.M ^ »0 -(}* Tf i-H C4 O eoorHTHPowj a'"*'o'co'csr.-r QO ,-1 -a* to to to 0» O -V C30 l^- CO M3 iH CO T-Tt"- eo" OOOQpOC 300 sou SsoQiogoom or- to ^ -"J* , - , - •O rH !>. r- W5 »0 locqt- 10010 to oy O (N -; «0 IOC ooooooc t^ 0(0^-00 (OC •-( o> ■<*• 01 i-i m c CO W CO-sCOOC 10 N M rH fh i-H N M 000 iOr-C0 300000i00<»0 8888S looaoot^co o m -rr -^ 1-1 o* C3 CO o >-( .-H CO 10 oToTo'co'c^eo' 00 00 03 CO CO CO ■* Oi WOOt^i-H OCl'O ^ooc .OOeO O >oaocoo lOOlOf^O C30-V t^«0 »ooii>-r-o 3eOO 3 10 10 3 01« §88S§ iciidor _ .- iiTMooir Ttl 10 c* N t- ■* p 10 N 00 i-H i-H t^ C4 i-H 000 3 PJt- "(JiNiO r-ioio COOiO -o to 10 CO r- i-H to CONCOCO CDiH ■3 a ■ a.g ■a PI P< i=l S'rt^I^Di O 03 fl fc! ^(-^ ce a ° rnT:: 9 2tn 43 >> o o "^ •gm go ojfa a 5 ma ° ° 9 9 -3 '2m SO ajw a S -3 mMooSwH 10 THE SECOND LIBERTY LOAN OF 1917. 88888 ■S3 c3 d Mt^ "-t COCO CD OO O O CO o oo^~ ■^ OCOOCfl co'cTco" 8oi> 8888 tDi-H M lO lO N (Nt- OeOOO l>OicDO COCO to U3 c^i-ToTio' t-eo ^t- OSOOO i-H eeccco 0(D0 o (M oi 01«D tOi-l 8SS888SSS t'OQOOQOOO 88888388 S8"S"8¥S9§S tji 113 OS lO O O (D ""I^O co'eror.-r_ 500a O 5S88 OiO cgiM ■*«o coo OO lOOO W ^- «3 tM ".^ W >-i ° 0) S » -' Hill iilll *»' Mining products . °^^' '^i' t^l Clothing and personal ornaments ._- % Jl?' ""». o»^ Furniture, carriages, etc a, ^oa, ^.id, ^zi Total 34,334,290,655 Grand total -^ 187,739,071,090 In 191 7 conservative estimate would place the wealth of the United States at $250,000,000,000, and income at $50,000,000,000. ^ Resources of the United States in 1916. [From the Annalist, May 7, 1917, p. 622.] United States imports, 1916 $2,391,654,335 United States exports, 1916 5,481,423,589 Money in circulation in United States May 1, 1917 5, 414, 961, 015 Gold stock in United States, approximately 3, 000, 000, 000 Value of potato crop, 1916, estimated 417, 000, 000 Value of oat crop, 191C, estimated 656,000,000 Value of wheat crop, 1916, estimated '. 1, 026, 000,000 Value of hay crop, 1916, estimated 1, 162, 000, 000 Value of cotton crop, 1916, estimated 1, 406, 000, 000 Value of corn crop, 1916, estimated 2, 296, 000,000 Value of all crops, 1916, estimated 9,111,000,000 Value of animal products, 1916, estimated 4, 338, 000, 000 Value of all crops and animal products, 1916, estimated 13, 449, 000, 000 New securities listed New York Stock Exchange, 1916 1, 991, 735, 000 For securities sold, United States, beginning war to Mar. 20, 1917.. . . 2, 605, 867, 253 Bonds listed on New York Stock Exchange, Jan. 1, 1914 12, 589, 577, 100 Stocks listed on New York Stock Exchange, Jan. 1, 1914 13,385,447,500 Raihoad stocks outstanding, June 30, 1915 8, 761, 307, 123 Eaiboad bonds outstanding, June 30, 1915 11, 400, 815, 200 Total railroad capitalization outstanding, June 30, 1915 20, 162, 122, 323 Pennsylvania Eailroad capitalization outstanding, Dec. 31, 1916 755, 089, 504 United States Steel Corporation capitalization outstanding Dec. 31, 1916 1,498,387,515 Cash holdings, all banks in United States, June 30, 1916 1, 911, 717, 000 Increase national-bank resources, 1916 over 1915 2, 326, 000, 000 Individual deposits, all banks in United States, June 20, 1916 22, 773, 700, 000 Deposits, savings banks in United States, June 30, 1916 5, 088, 587, 294 Total bank resources, United States, Nov. 17, 1916 34,489,531,000 A short history e^Loan''* ^'^" ^"^ ^^^ 6th day of April, 1917, a state of war was declared as existing between the United States and Germany. Secretary of the Treasury McAdoo im- mediately advised Congress of the financial necessities of the country, and on the 24th of April the greatest bond bill in the history of the United States and one of the greatest of the world was passed by a practically unanimous vote by both Houses of Con- gress. The law authorized an issue of $5,538,945,460 in bonds and $2,000,000,000 m certificates of mdebtedness. On the 2d day of May It was announced that the first bond issue was to be for $2 000 - 000,000, and the entire bond issue was named the Liberty Loan of 1917. On. the 14th day of May the details of the bonds were made Pv . .xl"" , s'^bscriptions formally invited. The campaign opened on. the 15th day of May and closed on the 15th day of June with the THE SECOND LIBERTY LOAN OF 1917. 17 result that over 5,000,000 American citizens of every section, race, and class subscribed to Liberty Loan Bonds, and the aggregate amount of their subscriptions was well over $3,000,000,000. The foregoing is a history of the first issue of the Liberty Loan; aU the rest is mere matter of elaboration and detail. The loan was not merely a success, it was a triumph and a splendid demonstration of the patriotism and financial abihty of the country. The direction of the campaign was centered in the Treasury Depart- ment, and the Federal reserve banks were its direct agents in their respective districts. Secretary McAdoo made especial efforts to make the loan a, popular loan and to distribute the bonds among the indi- vidual citizens of the country .as widely as possible. He made two speaking tours through the coimtry arousing and informing the people as to the needs of the situation, the value of the bonds, and the duty and wisdom of their investment in them. The campaign was marked by such cooperation and assistance from the people, the newspapers. National and State banks and trust companies, bond houses, and other corporations and business con- cerns and private firms and individuals, as well as fraternal, social, industrial, and other organizations, as to make it a great national movement. Liberty Loan committees, composed of voluntary work- ers for the success of the loan, were formed in practically every community. Never before was the business and the patriotism of the country so coordinated in a great national pubhc service, and it was this that made the greatest loan in our history the most successful in om- history. A system of partial payments for the pm-chase of bonds was arranged, and the tremendous transaction of the Government draw- ing $2,000,000,000 from the people of the country in exchange for bonds caused very little disturbance in the financial situation. The money for one partial payment was collected and expended and put back in the channels of trade almost in full before the next pay- ment was due. There was no withdrawal of the money from cu?cu- lation and locking it up in the Treasury, but it was left with the banks and used only when needed. The outstanding featirres of the first Liberty Loan were the mag- nificent results in the amoimt subscribed, the number of subscribers, and the avoidance of any interruption of the business of the country from so huge a demand upon the finances of the Nation. IV. HOW TO RAISE MONEY FOR WAR EXPENDI- TURES. How money is • j • raised for war The biUions reqiiired to organize, equip, ana main- l?d?rai*^Sation'^ tain OUT fighting forces on land and sea mnst come from two sources: Federal taxation and the sale of Government bonds. In response to a demand from the country that a large part of these bilUons be paid from money raised by taxation, Congress struggled from May to October to perfect a War Revenue Bdl designed to bring into the Treasury $2,500,000,000 annually. J This amount was believed by Congress to be as large as could be levied reasonably and fairly at this time. Every effort was made to distribute the burden of taxation where it could most easily be borne, without hardship to the individua or injury to the productive power of the Nation. The profits of a large number of individuals, partnerships, and corporations have been increased enormously by war business, or business incident to the war. These profits are known to be greatly in excess of ordinary times. The War Revenue Law levies a. tax on these excess profits which, it is estimated, will yield to the Govern- ment approximately half of the $2,500,000,000. The rates and exemptions in the income-tax law have been materially changed. The exemptions have been reduced from $3,000 and $4,000 for single and married persons, respectively, to $1,000 and $2,000. This change will impose a habiUty to pay income tax on approximately 6,000,000 individuals who were not affected by the law under the old exemptions. Approximately 500,000 indi- viduals paid tax under the old provision. Although each of these 6,000,000 individuals wiU be Uable to only a few doUars tax, it is estimated that from $20,000,000 to $30,000,000 will be collected from this source. The new biU very materially raises the rates of supertax affecting the larger incomes. It also increases the rate of taxation on cor- porations. It is estimated that these amendments will result in the collection of more than a billion dollars. The remainmg $250,000,000, it is estimated, will be raised from additional taxes on liquors and tobacco and from new stamp and excise taxes. The revenue laws in effect before the passage of the W"ar Revenue Act produced $810,000,000 for the fiscal year ended June 30, 1917. It is beheved that those laws wiU produce approximately $1,000,000,000 for the present fiscal year. This, with the $2 500 - 000,000 to be obtained from the War Revenue Act, will make a' total coUection of approximately $3,500,000,000. The relative size of this 18 THE SECOND LIBERTY LOAN OF 191'7. 19 amount to be raised by Federal taxation is better appreciated when compared with $415,000,000 collected by the Internal Revenue Bureau for the fiscal year ended June 30, 1915, and $512,000,000 collected for the fiscal year ended June 30, 1916. Money not tied Money mvested in Liberty Loan Bonds is in no way up- "tied up." So far as the Government is conceriied the money paid in for these bonds, including that loaned our allies, is being, and is to be, spent in this country and therefore immediately paid back to the people for labor an d products of the United States. So far from being "tied up" this money is ia effect never withdrawn from circulation. So far as the investor in the Liberty Loan Bonds is concerned his money is not "tied up," since there is always a ready market for United States Government bonds. Everybody knows this. As shown by the subscription the demand for the first Liberty Ijoan Bonds exceeded the supply by 50 per cent. This created an imme- diate market for the Liberty Loan Bonds. Another issue is now offered to the people, the terms of which have already been an- nounced by Secretary of the Treasury McAdoo. The oversubscrip- tion of the first issue is an indication of what may be expected for the second issue, which, it is hoped, wiU meet with a larger number of subscribers and for which a greater sum will be subscribed. Labor buys While it is not possible to give exact figures either liberty Bonds. as to the nmnber of subscribers or the amount of bonds bought, yet reports from many corporations and firms which are large employers of labor show that the workingmen of America were numerous and liberal purchasers in the initial $2,000,000,000 issue of Liberty Bonds. There can be no doubt that the working men of America are a class of citizens whose patriotism and ability afford a tremendous market for Government bonds. The safety of the Liberty Loan Bonds and, in the case of amounts less than $5,000, their exemption from all but estate and inheritance taxes make them an ideal invest- ment for the smaller investors, a fact which the labor element of America seems to have been quick to appreciate. That they will be liberal purchasers of the second issue of the Liberty Loan Bonds may be confidently relied upon. The working men are willing to buy liberally according to their means and are able to buy largely in the aggregate. The assistance given them in many instances by their employers in making arrange- ments for them to pay for the bonds by installments out of their wages, together with similar facilities offered by practically aU of the banks of the country, greatly aided the wage earners of the country in their purchase of Liberty Loan Bonds. V. WHAT A BOND MEANS, ESPECIALLY A LIBERTY BOND. Desciiptiou of a bond. Techiiically a bond is a promise to pay. A person buys a bond; that is, he lends his money to an organi- zation 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, $600, $1,000 or more has been borrowed from the buyer of the bond — ^for a stated period of years at a certain rate of interest, this interest to be paid on dates stated 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 3i 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 hj_ 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. Kinds of bonds. In a very general way bonds are divided into five different classes. I. Government. — A Government bond is issued by the National Government. It is secured by the wealth and taxing power of the country issuing the bond and is issued to provide iunds for the main- tenance of the Govermhent, to equip the Army and Navy, build water- ways, public works of all sorts, and in times of war to provide for increased needs. II. Municipal. — A municipal bond is issued by a city, town, or village. These bonds are issued to get money for building school- houses, waterworks, sidewalks, fire department stations, or other public improvements voted by the mumcipahty. III. Railroad. — Railroad bonds are subdivided into too many classes to be gone into in as brief a book as this. They are issued by a railroad company to build new fines, buy cars and engines, and to keep the roads in good condition. IV. Public utility. — Pubfic utility bonds are issued by corporations owning and maintaining pubfic service utihties; gas, electric light, street railways, and other such service reqmred by the public and not owned by the city in which they are located. 20 THE SECOND LIBEETY LOAN OP WIT. 21 V. Industrial. — Industrial bonds are issued, as the name implies, by corporations manufacturing on a large scale various sorts of products. Under this class come the bonds of steel companies and other big industries. Necessity requires a briefness which does not permit further sub- divisions of these five headii^s. Government bonds as a class rank highest in market value. The bonds of our Government have a higher rank than those of any other country because the credit of the United States is now the highest of all civilized countries. . What a bond I. Security of priTidpal. — ^The wealth of the United is— how United States is back of the bonds issued by the Government. S***!* Liberty Since the present organization of the United States fs^s^ntia^^^ of a in 1790 no debts have ever been repudiated. The good investment, money borrowed has always been repaid. The United States has the lowest per capita debt of any great nation. II. Security of income. — The return upon the principal invested is the income or interest. The interest on these bonds is a part of the Government's expense. Should the power of our Government fail, not even cash would be of value, so high is our standing. III. Fair income return. — Four per cent for such high-grade se- curity is a fair return. But in addition these bonds bear the privi- lege of convertibility into a higher rate of interest if the Government has to borrow more money at a higher rate. IV. MarJcetahility.- — ^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 banlc or trust company throughout this entire country. V. Value as cowateral. — ^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 eta such security. VI. Tax exemption. — ^The Government Bonds of the second Lib- erty Loan are exempt as to principal and interest from all taxation Sthe United States, any State or any of the possessions of the lited States, or by any local taxing authority, except (a) estate or inheritance taxes, and (6) United States graduated additional in- come taxes, commonly known as surtaxes, and excess profits and war profits taxes. The interest on an amount of bonds and certifi- cates 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 (i) above. VII. 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. VIII. Acce^tahle duration. — The period of time over which a loan continues is m the case of the liberty loan bonds of great advantage. If bought by a yoimg 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. 22 THE SECOND LIBERTY LOAN OP ISll. IX. AceevtaUe denomination.— These bonds are issued in denomi- nations of $50, $100, $500, $1,000, and multiples of $1,000; theretore they meet the requirements of small and large investors. X. Potential appreciation. — There is every reason to beueve that these bonds will mcrease in value after the war is over, to ]udge by the fact that in the past war bonds did increase in value at the dose of the war. In the event of the war endmg within a short time these bonds would increase in value because of certain Tax exenn)tions. Therefore people of wealth will want to invest in them and small holders wUl 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. Origin of Gov- ernment bonds. The Government Loan, which is generally regarded as being the precursor of bond issues by Governments and from which the vast system of modem Government borrow- ings is a legitimate development, was made by the EngHsh Govern- ment in 1693. Long before that time the ItaUan princes had been accustomed to make extensive borrowings from their wealthy subjects, and the French Government under Louis XIV had borrowed great sums from the French people; large loans to the Government of Holland were frequent and were considered most desirable investments by the frugal and conservative Dutch people. But the Enghsh loan authorized by Parliament in 1692 is generally credited with being the beginning of the modem system oi Govern^ ment bond borrowing. From time immemorial kings and rulers had been accustomed to borrow from their subjects, but such loans were private transactions and the lender often was far from a voluntary creditor. Readers of Ivanhoe and of other books dealing with medieval times wiU recall references to such princely financiering. They were sometimes called ' ' forced loans " or given the euphemistic title of ' ' benevolences." It was the sovereign who owed the debt, not the Governpient or nation, and even his legitimate successor often refused to acknowledge the obligation. The fortunes of the great banking house of Rothschild are said to have originated in loans to princes and rulers. It is a curious fact that the bill in Parliament for the first real Government loan, which was a great innovation in public finance, was passed by the House of Commons without a division and then passed by the House of Lords without any amendment — this in conservative England, conservative in aU things and especially conservative in finance and financial legislation. So successful was this loan, and succeeding Government loans by Great Britain and other countries, that there sprang up a large class of financiers and public economists who maintained that a great national debt was a great national blessing. WhUe this opinion is not generally entertained, the idea of a Government being indebted to its own citizens in large sums of money is regarded as not at all analogous to indebtedness by an individual. The direct personal financial interest each citizen bondholder has in the Government is recognized as a valuable national force. For instance the 5,000 000 holders of Liberty Loan Bonds can be counted on as having a keen THE SECOND LIBERTY LOAN OP 1911. 23 interestin public affairs and exerting a strong influence for wise and economical legislation and administration. ■ In affording a perfectly safe and marketable security for the in- vestment of individual saving Government bonds are credited with performing a very valuable economic function. Authorized as they are, theoretically at least, and generally in practice, for purposes whose use and valuie extend into the future justifies the existing generation of the body politic in leaving part of the cost of such things to be paid for by their successors. So far as the United States is concerned, the Liberty Loan of 1917 is not only by far the largest loan this Government has ever made, but it is peculiarly ■well adapted to perform a vast national economic service in the way of providing opportunities for investment of the savings of the great body of the people. The small denominations of some of the bonds and the facihties for paying for them in small monthly or weekly installments afforded purchasers by banks and employesrs enable almost any American, even those of small means and small "earning capacity, to become a United States bondholder. The objects and the purposes for which the proceeds of the bonds are being and are to be used are national in their scope — even more, they are international. In arming, equipping, and supplying our soldiers and in assisting our Allies by whose side they are to fight in France the proceeds of the Liberty Loan Bonds are serving a purpose approved by all Americans. in estalshshing peace and liberty in Europe, in bringing to an end the awful sacrifice of hfe there, in making the world safe for democracy the Liberty Loan is being used to accompUsh a work by which all generations of this and of other Nations wiU profit It is being usea to accompUsh the mission of America as announced by Washington and the other forefathers of this Nation and as believed in and maintained by their descendants and successors to the present hour. United States The United States Government issues bonds in bonds, two forms: (1) Bearer bonds with interest coupons attached, commonly called coupon bonds; (2) bonds registered both as to principal and interest. Liberty Loan bonds are issued in both bearer and coupon forms. i , • 1 1 , Bearer or coupon honds. — A bearer or coupon bond is payable to the bearer, the holder, the title passing by delivery. The Treasury Department does not require proof of ownership when such bonds are presented for payment or exchange, the holder thereof bemg recogaized. Such bonds may be bought and sold without formahty and without indorsements of any kind. Attached to bearer bonds are sheets of coupons or certificates of interest. One of these coupons becomes due each interest payment date and should be detached by the owner of the bond and cashed at his bank or presented to a Treasury office for payment. 1 1 , •, i Beqistered bonds.— A registered bond is payable to its owner only or his order, and can be transferred only by being properly mdorsed and assigned by the owner. The bond has mscribed on the face of it the name of the owner or payee, and such fact is recorded on the books of the Treasury Department agamst the particular bond mdi- 24 THE SECOND LIBERTY LOAN OF 1911. cated. The change in ownership of a registered bond is effected by the original payee indorsing and assigning the bond by; using the form on the back thereof ta accordance with the regulatio^s of the Treasury Department. Such assimment must be made before an officer designated by the Treasury Department, and such officer must certify thereto and affix his official seal. The officers who are authorized to witness assignments are indicated in a note printed on the back of the bond. Generally speaking, certain judicial and Treasury officers and executive officers of Federal Reserve and National Banks are authorized to witness assignments. When the owner of a registered bond dispose^ of.it and has prop- erly assigned it, it should oe forwarded at once to the Secretary of the Treasury for transfer on the books of the department. The bond so forwarded is canceled and a new bond in the name of the new owner is issued and sent to the new owner by registered mail. The interest on registered bonds is paid by means of checks drawn by the Secretary of the Treasury on the Treasury of the United States, such checks being issued on the day interest is due. They are sent by mail to the owiaer of the bond. A good way to In encouraging the people of America to save, it is ^*'^- believed that the Liberty Loan Bonds are going to perform an important function in our national life. The small denomination of some of the bonds renders it possible for the ordi- nary wage earner to purchase one with the savings of a few months, and the oanks of the country have undertaken to provide for the purchase of these bonds in sinaU weekly or monthly payments. By devoting, each week or each month, to the purchase of Liberty Loan Bonds such Httle sums of ready money as are often frittered away for useless things one not only can acquire property that ranks among the very best securities in the history of the world, but can at the same time feel that a patriotic duty has been performed and a habit of saving acquired. The ultimate result of this war will be victory for America, but what the effects of the war will be upon America and American people is unknown. When such a future confronts us prudence demands that we provide for contingencies. No one knows how great a help savings invested in a Liberty Loan Bond may be a few years hence. And one's savings not only will be sectire but will be constantly bringing in interest. There are other possibiHties — they might better be called probar bnities — and one is that the Liberty Loan Bonds, when peace comes and money now in active industrial use will be seeking quiet invest- ment, may bring a premium. Liberty Bonds Likening the United States to a great corporation preferred stock, ^j^^^ ^^^j.^ ^^^^^ ^ hundred milhon stockholders and with capital stock and resources of more than two hundred and fifty biihons of dollars, and an annual income of fifty billions of dollars, each American citizen is a stockholder in this great corporatioil. Even those whose only assets are their earning capacity own shares ifl our pubhc domain and property and are working on a profit-sharing basis with a vote and a voice in the management of the corporation and with the right to acquire more stock at any time. THE SECOND LIBERTY LOAN OF 1917. 25 _ A Liberty Loan Bond may be likened to a share of preferred stock m this gigantic corporation. Like preferred stock in other corpora- tions 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 whUe 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 prop- erty, 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 cor- poration 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. The Liberty It has been rep,eatedly pointed out that in purchas- Bonds and the ing Liberty Loan Bonds the farmers of the United ^^'^"i^'^s. States were furnishing the means to their best custo- mers to purchase the products of their farms. Much of the pro- ceeds of the Liberty Loan, both the amount used by the Umted States Government and the amount loaned to the Allies, is to be expended in purchasing food and suppHes for their armies from the farmers of the country. There are other reasons, however, that make the Liberty Loan Bonds especially desirable investments for farmers. A safe investment is particularly suited to a farmer because he is in most instances at a distance from bond markets and not in posi- tion either to know of or immediately act upon information of matters affecting the value of bonds. The Liberty Loan Bonds are invincibly secure, backed as they are by the resources of the richest Nation in the world and the faith and credit of a people who have always respected their obligations, and they are of stable value and liable to little or no fluctuations in market value. The farmer is a busy man and often has neither the time nor the opportunity to study the question of finance afld bond values. The Liberty Loan Bonds being bonds about which there can be no ques- tion, he can therefore" rest assured that he has' made no error in judgment when he puts his money into them. The farmer often feels the need of ready cash before the harvesting of his crops. The Liberty Loan Bond puts into his hand a security on which he can always borrow money and at a rate as low or lower than he could borrow on any other security and with less trouble. There is another aspect of this investment in Liberty Loan Bonds that will appeal to every true American. He is supporting the Gov- ernment, he is supporting our soldiers in France, and he is doing his duty as a citizen. To the mer- Among large and long established business firms chant, there come times when credit is necessary but diffi- cult to obtain. Even with the best sort of management, the small organization has greater difficulty in meeting these periods of busi- ness depression than the larger ones, though to both the task of 26 THE SECOND LIBERTY LOAN OF 1917. borrowing money or getting credit during a slack time presents a cause of worry if it doesn't quite result in a failure. Eeal estate can be mortgaged, chattel mortgages can be placed on store or factory furnishings and machinery. Money can be borrowed on stock on hand. Though helpful, all of these methods take time and are costly because all of them mvolve legal services of some sort and by none of them can the merchant ever get over 75 per cent of the full valu^ of the collateral he puts up. Often he gets less than 75 per cent. There is one sort of collateral on which a man can always borrow from his .bank, and that is sornid bonds. Government, municipal, railroad, public utility, and industrial bonds, if they are high grade issues, are always taken by banks for from 80 tp 90 per cent of their value. Of all classes of bonds United States Government issues have the highest rating. Backed hj a nation which has never repudiated a debt since its organization in 1790, a nation with the greatest wealth ever accumulated by any people, these bonds are the best invest- ment ever offered. The merchant who buys liberty Bonds is taking out business insurance. He is insuring against future periods of depression. Slack times do not cause the alarm in a business concern which has a safety deposit box well fiUed with sound bonds that it causes to the man who boasts that he puts all his funds back into his business. A man may make 8, 10, or more per cent on the money he invests in, his business and then lose it all because he did not have the fore- sight to take less income on a part of his capital in order to insure his business against future needs. The bonds now being issued by the United States Government meet the needs of the man investing for business insurance, just as they do those of anyone seeking a very high-grade security. The merchant buying these bonds can do it without financially crippling himself in the least. Every bank has arranged a partial- payment plan whereby the situation is met in practically every case, and by taking a certain percentage on his profits each week to invest thus in Liberty Bonds the effect upon his business is beneficial rather than detrimental. Aside from the patriotic motives that are actuating many who buy these bonds are all those reasons that make these bonds the best investment offered to the American people to-day. The Woman's _, , t -i t ^ . . i Liberty loan Ihe Woman s Liberty Loan Committee, appointed Committee. by the Secretary of the Treasury to represent and direct the activities of women in the sale of Liberty Bonds, has a membership of eleven and headquarters in the Treasury Department, Washington. For purposes of organization the Committee has made the State the unit. Each State and Territorial division of the United States has a chairman appointed by the Woman's Liberty Loan Committee and serving, through the cooperation of the Woman's Committee of the Council of National Defense, upon the executive committee of the State division of the latter body, representing Liberty Loan interests thereon and utiHzing the established organization of the defense division for the promotion of Liberty Loan campaigns. This State THE SECOND LIBERTY LOAN OP 1917. 27 chairman has active charge of all woman's work for the Liberty Loan in her State. She, in turn, appoints county or district chairmen, as well as chairmen for the larger cities .in her State. These appoint divisional officers, carrying down the organization through town- ship or precinct captains to heads of teams of ten. Each officer reports to theofficer directly above her, the State chairman reporting to the chairman of the Woman's Liberty Loan Committee. The Wom.an's Liberty Loan Committee has also appointed chair- men in each of the twelve Federal Reserve Banking Districts of the United States. These chairmen act in an advisory capacity to the Woman's Liberty Loan Committee and to the State chairmen in their districts. This Federal Reserve chairman also serves as dele- gate from the Woman's Liberty Loan Committee to the Liberty Loan Committee of the Federal Reserve Bank Board of her district. Chairmen to represent the Liberty Loan in other American countries which are also at war with Germany or which have shown their cooperative friendship to the United States and our Allies have also been appelated. The Committee has established an Advisory Council composed of 'the presidents of womeo's organizations of nation-wide membership. Through this Council the Committee is circularizing millions of women, informing them of what women may do for the liberty Loan. Through its State Chairmen the Committee is distributing cards, folders, dodgers, and other literature designed to take definite infor- mation concerning the Liberty Loan into every home in the United States. Through this organization the Committee will have enrolled almost 100,000 women — active workers for the Loan. In addition to this the Committee has arranged for the placiag of Liberty Loan reminder cards in every library book in the country during the cam- Eaign. - The Committee has also established the Liberty Loan league, composed of purchasers of Liberty Bonds of the first issue, enlisting them as promoters of the Second Issue. A special woman's poster is being distributed by the Committee. A publicity service for interesting women in the sale of Liberty Bonds is another branch of the Committee's activities. A special subscription blank for distribution by women agents has been prepared by the Committee. All women desiring to work for the Liberty Loan by aiding in this distribution or by promotion of the Loan in any way are requested to communicate with their local chairman, with their State chairman, with their Federal Reserve District Chairman, or with the Woman's Liberty Loan Committee, Treasury Department, Washington, D. C. Educational value In addition to the main result, that of seUing the of the Liberty $2,000,000,000 bond issue, and the equally important ^°^^ campaign. result of placing the bonds in every section of the country and among all classes of Americans; the campaign for the sale of the Liberty Loan Bonds has had a great educational value. The people of the United States are much better informed now about their Government's finances and methods of finance than ever before. Hundreds of thousands of people whose idea of Government bonds was vague and indefinite now not only possess Liberty 13741°— 17 3 28 THE SECOND IJBEBTY LOAN OF 191*7. Loan Bonds, but know what a. Government bond is and the peculiar worth and value of such securities. They have been informed Of what other Governments have done in the way of bond issues, of the wealth of this country compared with its national debt, and the wealth of other nations as compared with their national debts. The campaign has opened and developed a vast market for future bond issues of the United States and has opened up to the American people and made them acquainted with a field of investments for their savings the equal of which they never had before. The newspapers and the banks of the country were great instructors in this campaign. Scarcely a citizen of any town and scarcely a newspaper reader of any sort in the United States but has had the opportunity thrust upon him during the campaign of informing him- self regarding the Liberty Loan Bonds of 1917 in particular and the United States Government bonds in general, and the nature and terms of such securities and the resources and means back of them. The general plan of campaign of the Loan has already succeeded in intensifying our American unification and is expected to result in a deeper community of interest throughout the Nation. A new and great source of individual interest in the Government has been created all over the country. The Government is closer to the people,. and the people have an additional common interest with each other and with the Nation as a result of this Liberty Loan Bond sale. Bonds,^by Hon! No loan of $2,000,000,000 can be paid for, as we Benjamin Strongj commonly express it, "in cash." The amount is too jr. large and payment must be made by complicated bookkeeping operations, which can be roughly described as "transfers of credit." To do this successfully credit must be shifted from the account of one bank depositor to the account of another bank depos- itor, from one bank to another bank, from one part of the country to another part of the country, and these shiftings of credit involve a temporary shifting of a certain proportion of oank cash or reserve money, and therem lies the danger. If every purchaser of Government bonds could make payment at his own bank and this amount be transferred by that bank to the credit of the Government, then the credit could be disbursed by the Government in the community where the bank is located and no disturbance of credit whatever would arise, because no bank re- serves would need to be shifted. In a great loan of $2,000,000,000 subscribed and paid for in varying amounts in all parts of the coun- try it is inevitable that prehminary withdrawals of bank balances from one part of the country to another will be made in anticipation of payment, and again after the funds are placed to the credit of the Government throughout the country they must be gradually with- drawn to those points where the Government has various bills to pay. Look at the problem from the standpoint of the bond buyer. There are in this country (exclusive of a negligible number of those who own securities of foreign origin which could be resold in foreign countries) only four classes of people who can subscribe for Govern- ment bonds. The first class of bujrers comprises those who have hoarded actual cash or currency ua then- houses or safe-deposit vaults, who are induced THE SECOND LIBERTY LOAN OF lOll. 29 to buy Government bonds and who produce that cash for the purpose. Purchases of Government bonds by such people (of whom tnere are few in the United States) have the effect of strengthening the banking position because they bring reserve money, that is gold, out of hiding and put it in bank reserves where it serves as the basis of credit. The change occasioned in the Nation's general bank account as a result is notsunply to add a given ailnount to the bank deposits but also to add an equal amount, dollar for doUar, of reserve cash. France, prior to the war, held a vast store of gold tucked away in peasant's hiding places, and the production of thatgold in response to the Government's call has immensely strengthened its banking position. The second class is composed of the capitalists and corporations with balances in the bank m excess of needs. When bonds are pur- chased by a member of this class the owner of the bank balance, Mx. X. Y. Z., sells or transfers that balance to the Government in exchange for a Government bond. If the Government leaves the deposit with the bank which holds Mr. X. Y. Z.'s account it is simply a transfer of the balance of Mr. X. Y. Z. to Mr. U. S. A. No cash reserves shift, no loans would need to be called, and no change would take place in the balance sheet of the bank, either of assets or lia- bilities. The third class of bond buyers is that which has bank accounts but has no surplus balances in bank to spare for invesment in Gov- ernment bonds. Having credit at the bank, however, they are in- duced to buy Government bonds and borrow from the bank tem- SorarHy in order to pay for them. Such a bond buyer pays for his ond out of a bank deposit which is created by making a loan. The deposit so made is transferred to the credit of the United States of America, and the bonds are turned over to the bank by the buyer to secure the bank for its loan. Buyers of this class must thereafter economize in order to pay off the loans, and in that way savings out of future earnings are made available to the Government in advance of the earnings being made. The fotirth class of bond buyers, and in some respects the most important in time of war, is the great body of wage earners and salaried people who frequently have no bank account and spend about aU that they earn. There are many millions of such in this country whose material welfare will be improved and whose attitude toward their Government wiU be benefited if they can be induced to buy bonds. But how can this be brought about ? Only by showing them how to cultivate the habit of saving. Take one industrial organization, as an example, employmg, say, 20,000 laborers: If these men earn an average of $1,200 each per annum and can afford to save $100 per annum, their employer could enter into agreements with them by which, say, $8 would be deducted from the pay roll of each man every month and deposited in bank for future mvestment. Fifty dollars apiece in six months is $1,000,000. During the process of setting aside and earmarking these earnings or savmgs they could be temporarily invested m short obligations of the Government, convertible at a later date into Government long-time bonds. . . By this process no permanent bank expansion arises. As rapidly as savings accumulate they are turned over to the credit of the Gov- ernment which issues its short notes therefor and these short notes 30 THE SECOND LIBERTY LOAN OF 1911, later are converted into long bonds. The bank balance which m, originaUy the bank balance of the employer, out of which wages wem paid, has through the savings process been transferred to the credit of the Government without disturbance to bank credit. Assuming that our Gove-Timenfc finds it necessary, say, every few months, to borrow large sums for war purposes, how readily miglit this be accomplished if aJl classes were induced to save in anticipation of such investment in the bonds of their Government ? The rich man appropriates so much of his income, the rich corpX)ration so much of its profits, the poor man so much of his salary or wages. During the period between bond issues these savings are turned over to the Gov- ernment in installments in exchange for short notes. When lie bond issue comes along, the short notes are converted into long bonds. The whole operation has been conducted without the use of cash or reserve money but by simple bookkeeping entries on the books of banks, which result in a gradual but constant transfer of bank de- posits representing the nation's savings to the credit of the Govern- ment. But the question will be asked, "Will not this enormous transfer of bank credit from individuals and corporations to the credit of the Government itself cause expansion?" It will not do so, for these credits are not created by. oank borrowings but by savings. The Government is spending money as fast as it is received. The veiy credit so set aside for Government use must be instantly paid outhy the Government for supplies, wages of soldiers and sailors, and for the civil establishments. As soon as the credit is inscribed on the books of the bank for the use of the Government, the Government checks against it and turns it back to the very individuals, corjporar tions, and wage earners who have produced it. A new credit is not created but existing credit moves faster around this circle from the wage earner and saver to the Government and back to the produce and manufacturer and through them to the wage earner. The speed with which credit moves in these operations bears a direct relation to the "speeding up" in the products of our farms and forests, our mines and our manufacturing estabhshments. This country is confronted by a vast problem of finance, but for- tunately with vast resources in gold reserves and credit machinery by which these operations may be handled. In furnishing the Gov- ernment with the credits required the primary necessity is for people to save. VI. HOW WE WERE FORCED INTO WAR. ., T • , /^ „ , Resolution ^.ereae the Imperial German Gove nment has co..jmitted re- adopted April 6, seated acta of war against the Govemment and th 3 people of 1917, by Con- Tie United States of America: Therefore be it gress declaring a Resolved by the Senate and House of Representatives of the United stai- of war with ites of America in Congress assembled, That the state of war iJeriiiany. tween the United States andthe Imperial German Government lich has thus been thrust upon the United States is hereby formally declared; d that the President be, and he is hereby, authorized and directed to employ B entire naval and military forces of the United States and the resources of the ivernment to carry on war against the Imperial German Government; and to ing the conflict to a successful termination all the resources of the country are reby pledged by the Congress of the United States. From an ad- It is plain enough how we were forced into the war. dress by the «ihe extraordinary insults and aggressions of the Im- S'^^!4* oV °** ^^^ lerial German Government left us no self-respecting Fi"g Day'^Jme >hoice but to take up arms in defense of our rights as i4, 1917. ' i I free people and of our honor as a sovereign Govern- rnent. The military masters of Germany denied us the right to be • leutral. They filled our unsuspecting communities with vicious spies and conspirators and sought to corrupt the opinion of our people in "their own behalf. When they foimd that they could not do that, their agents diUgently spread sedition amongst us and sought to 'draw our own citizens from their allegiance — and some of those agents were men connected with the official embassy of the Ger- ' man _ Government itself here in our own capital. They sought by violence to destroy our industries and arrest otir commerce. They tried to incite Mexico to take up arms against us and to draw Japan into a hostile alUance with her — and that, not by indirection, but by direct suggestion from the foreign office in Berhn. They impudently denied us the use of the high seas and repeatedly executed their threat that they would send to their death any of our people who ventured to approach the coasts of Europe. And many of our own people were corrupted. Men began to look upon their own neighbors with suspicion and to wonder m their hot resentment and surprise whether there was any community in which hostile intrigue did not lurk. What great nation in such circumstances would not have taken up arms f Much as we had desired peace, it was denied us, and not oi our own choice. This flag under which we serve wotdd have been dishonored had we withheld our hand. The war was begun by the military masters of Germany, who E roved to be also the masters of Austria-Himgary. These men ave never regarded nations as peoples, men, women, and children of like blood and frame as themselves, for whom governments existed and in whom governments had their life. They have regarded them merely as serviceable organizations which they could by force or intrigue bend or corrupt to their own purpose. They have regarded the smaller states, in particular, and the peoples who could be over- whelmed by force, as their natural tools and mstrmnents of domina- tion. Their pm-pose has long been avowed. The statesmen of other 31 32 THE SECOND LIBERTY LOAN OP 1911. nations, to whom that purpose was incredible, paid little attention; regarded what German professors expounded in their classrooms and German writers set forth to the world as the goal of German pohcy as rather the dream of minds detached from practical affairs, as preposterous private conceptions of German destmy, than as the actual plans of responsible rulers; but the rulers of Germany them- selves knew all the while what concrete plans, what well advanced intrigues lay back of what the professors and the writers were saying, and were glad to go forward unmolested, filling the thrones of Balkan States with German princes, putting German officers at the service of Turkey to drill her armies and make interest with her Government, developing plans of sedition and rebellion in India and Egypt, setting their fires m Persia. The demands made by Austria upon Servia were a mere single step in a plan which compassed Europe and Asia, from Berlin to Bagdad. They hoped those demands might not arouse Europe, but they meant to press them whether they did or not, for they thought themselves ready for the final issue of arms. Their plan was to throw a broad belt of German military power and pohtical control across the very center of Europe and beyond the Mediterranean into the heart of Asia ; and Austria-Hungary was to be as much their tool and pawn as Servia or Bulgaria or Turkey or the ponderous states of the East. Austria-Hungary, indeed, was to become part of the central German Empire, absorbed and dom- inated by the same forces and influences that had originally cemented the German states themselves. , The dream had itsneart at Berlin. It could have had a heart nowhere else ! It rejected the idea of solidarity of race entirely. The choice of peoples played no part in it at all. It contemplated binding together racial and pohtical units which could be kept together omy by force — Czechs, Magyars, Croats, Serbs, Roumanians, Turks, Armenians — the proud States of Bohemia and Hungary, the stout little Commonwealths of the Balkans, the in- domitable Turks, the subtile peoples of the East. These peoples did not wish to be united. They ardently desired to direct their own affairs, would be satisfied only by undisputed independence. They could be kept quiet only by the presence or the constant threat of armed men. They would live under a common power only by sheer compulsion and await the day of revolution. But the German mili- tary statesmen had reckoned with all that and were ready to deal with it in their own way. And they have actually carried the greater part of that amazing plan into execution ! Look how things stand. Austria is at their mercy. It has acted, not upon its own initiative or upon the choice of its own people, but at Berlin's dictation ever since tiie war began. Its people now desire peace, but can not have it until leave is granted from Berhn. The so-called central powers are in fact but a single power. Servia, is at its mercy, should its hands be but for a moment freed. Bulgaria has consented to its will, and Roumania is overrun. The Turkish armies, which Germans trained, are serving Germany, certainly not themselves, and the guns of German warslups lying m the harbor at Constantinople remind Turkish statesmen every day that they have no choice but to take their orders from Berlin From Hamburg to the Pei-sian Gulf the net is spread. Do you not now understand the new intrigue, the intrigue for peace, and why the masters of Germany do not hesitate to use any agency THE SECOND LIBEETY LOAN OF 1917, 33 that promises to effect their purpose, the deceit of the nations ? Their present particular aim is to deceive all those who throughout the -world stand for the rights of peoples and the self-government of nations; for they see what immense strength the forces of justice and of hberalism are gathering out of this war. They are employing hberals in their enterprise. They are using men, m Germany and without, as their spokesmen whom they have hitherto despised and oppressed, using them for their own destruction — socialists, the leaders of labor. The sinister intrigue is being no less actively conducted in this country than in Russia and in every country in Europe to which the agents and dupes of the Imperial German Government can get access. That Government has many spokesmen here, in places high and low. They have learned discretion. They keep within the law. It is opinion they utter now, not sedition. They proclaim the liberal purposes of their masters; declare this a foreign war which can touch America with no danger to either her lands or her institutions; set England at the center of the stage and talk of her ambition to assert economic dominion throughout the world; appeal to our ancient tradition of isolation in the pohtics of the nations; and seek to under- mine the Government with false professions of loyalty to its princi- ples. President Wil- The object of this war is to dehver the free peoples son's reply to of the world from the menace and the actual power of pope *' Augu^T a vast military establishment, controlled by an irre- 1917" ' sponsible Government, which, having secretly plan- ned to domiaate the world, proceeded to carry the plan out without regard either to the sacred obhgations of treaty or the long-estab- lished practices and long-cherished principles of international action and honor; which chose its own time for the war; dehvered its blow fiercely and suddenly ; stopped at no barrier, either of law or of mercy ; swept a whole continent within the tide of blood — ^not the blood of soldiers only, but the blood of innocent women and children also and of the helpless poor; and now stands balked, but not defeated, the enemy of four-fifths of the world. This power is not the German people. It is the ruthless master of the German people. Eesponsible statesmen must now everywhere see, if they never saw before, that no peace can rest securely upon poMtical or eco- nomic restrictions meant to benefit some nations and cripple or embarrass others, upon viudictive action of any sort, or any kind of revenge or dehberate injury. The American people have suffered intolerable wrongs at the hands of the Imperial German Government, but they desu-e no reprisal upon the German people, who have them- selves suffered all thmgs in this war, which they did not choose, They believe that peace should rest upon the rights of peoples, not the rights of Governments— the rights of peoples, great or smaU weak or powerful— their equal right to freedom and security and self-20vemment and to a participation upon fau- terms m the eco- nomic opportunities of the world, the German people, of course, included 5 they will accept equahty and not seek dommation. Vn. WHY THIS IS OUR WAR. From report of /-i t« Committee on On the last day of January, 1917, Count Bern- Pubiic informa- g^Qpff handed to Mr. Lansing a note in whicli liis ttiTpKs'idenf ^^ Government announced its puri)ose to intensify and render more ruthless the operations of their subma^ rines at sea, in a manner against which our Government had pro- tested from the beginning. The German Chancelor also stated before the Imperial Diet that the reason this ruthless policy had not been earlier employed was simply because the Imperial Government had not then been ready to act. In brief, under the guise of friendship and the cloak of false promises, it had been preparing this attack. This was the direct challenge. There was no possible answer except to hand their ambassador his passports and so have done with a diplomatic correspondence which had been vitiated from the start by the of tenproved bad faith of the Imperial Government. On the same day, February 3, 1917, the President addressed both Houses of our Congress and announced the complete severance of our relations with Germany. From an ad- dress by Hon. w. What we are fighting for is the only thing for which r ' ^d^iff°' 22' ^ great nation of free men would be justified in fight- ^ivere ay , ^^ y^^ ^^^ ^^ ^j^^ ^^^ because the call of human- ity compels it. The German Kaiser has challenged civilization. His military autocracy stands to-day as the antago- nist of the principle of humanity and seK-govemment everywhere. The success of that principle would mean the universal enslave- ment of the human race. In order to gain his ends the Kaiser has violated treaties. He has not hesitated to disregard the ele- mental laws of civilization and the primal rights of humanity. He has struck a mortal blow at the secTirity of society, if by victory he sustains the doctrino thr.t no treaty obhgations are sacred when they interfere with what a nation conceives to be national necessity. When he violated the neutrality of Belgium and tore up the Belgium treaty as "a scrap of paper" he announced a doctrine which if sus- tained, makes impossible the security of the civilized world, because the maintenance of friendly relations and intercourse between mod- ern nations is based absolutely upon the inviolability of treaty obhga- tions. From an ad- dress by Hon. For two years and more we held to a neutrality that Lme" deiiverVd ^^^^ ^ apologists for things which outraged man's May 22, 1917. Common sense of fair j)lay and humanity. At each new offense — the invasion of Belgium, the killing of civilian Belgians, the attacks on Scarborough and other defenseless towns, the laying of mines in neutral waters, the fencing off of the 34 THE SECOKD LIBEETY LOAN OP 1917. 35 seas— and on and on through the months we said: "This is war — archaic, uncivilized war, but war! All rules have been thrown awaj; all nobility; naan has come down to the primitive brute. And while we can not justify we will not intervene. It is not our war." Then why are we in ? Because we could not keep out. We talked in the language and in the spirit of good faith and sincerity, as honest men should talk, until we discovered that our talk was coe- strued as cowardice. And Mexico was called upon to invade us. We talked as men would talk who cared alone for peace and the advancement of their own material interests, until we discovered that we were thought to be a nation of mere money makers, devoid of all character — ^until, indeed, we were told that we could not walk the highways of the world without permission of a Prussian soldier; that our smps might not sail without wearing a striped uniform of humiliation upon a narrow path of national subservience. We talked as men talk who hope for honest agreement, not for war, until we fo\md that the treaty torn to pieces at Liege was but the symbol of a policy that made agreements worthless against a pm-pose that knew no word but success. And so we came into the war for ourselves. It is a war to save America — to preserve self-respect, to justify our right to live as we have lived, not as some one else wishes us to live. For American is not the name of so much territory. It is a Hying spirit, born in travail, grown in the rough school of bitter experience, a living spirit which has purpose and pride and conscience — knows why it wishes to live and to what end, knows how it comes to be respected of the world, and hopes to retain that respect by Hving on with the light of Lincoln's love of man as its Old and New Testament. It is more precious that this America should Mve than that we Americans should Hve. And this- America, as we now see, has been challenged from the first of this war by the strong arm of a power that has no sympathy with our purpose and wiU not hesitate to destroy us if the law that we respect, that rights that are to us sacred, or the spirit that we have, stand across her set will to make this world bow before her policies, backed by her organized and scientific miht^y system. fee world of Christ— a neglected but not a rejected Chnst— -has come again face to face with the world of Mahomet, who willed to win by force. , . , . ^^ ^ i,* With this background of history and in this sense, then we tight ^]ES7of Belgium— invaded, outraged,, enslaved, impoverished Belgium We can not forget Liege, Louvam, and Cardmal Mercier. TrSislated into terms of American history, these names stand tor Bunker Hill, Lexington, and Patrick Henry. Because oiFrance-iivaded, desecrated France, a mOlion of whose hefoicXlhave^ed to save the land of Laf avette Glorious golden Frlnce the pJeserve-r of the arts the land o^ noble spirit-the first land to foUow our lead into repubhcan liberty. Because of England-from whom came the laws, traditions, stand- ard of life and Cerent love of liberty, which we caH Anglo-Saxon c^Si^atSn We defeated her once upon the land and once upon the 36 THE SECOND LIBEETY LOAN OF 1917. sea But Australia, New Zealand, Africa, and Canada are free be-, cause of what we did. And they are with us in the fight for the free- dom of the seas. Because of Kussia — new Russia. She must not be overwhelmed now. Not now, surely, when she is just born into freedom. Her peasants must have their chance; th'ey must go to school to Wash- ington, to Jefferson, and to Lincola until they know their way about in this new strange world of government by the popular wiU. Because of other peoples, with their rising hope that the world may be freed from government by the soldier. We are fightingGermany because she sought to terrorize us and then to fool us. We could not believe that Germany would do what she said she would do upon the seas. We still hear the piteous cries of children coming up out of the sea where the Lusitania went down. And Germany has never asked forgiveness of the world. We saw the Sussex sunk, crowded with the sons and daughters of neutral nations. We saw ship after ship sent to the bottom — ships of mercy bound out of America for the Belgian starving; ships carrying the Red Cross and laden with the wounded of all nations ; ships carrying food and clothing to friendly, harmless, terrorized peoples; ships flying the Stars and Stripes — sent to the bottom hundreds of miles from snore, manned by American seamen, murdered against all law, without warning. We are fighting Germany because in this war feudalism is making its last stand against on-commg democracy. We see it now. This is a war against an old spirit, an ancient, outworn spirit. It is a war against feudalism — the right of the castle on the hill to rule the village below. It is a war for democracy — the right of aU to be their own masters. Let Germany be feudal if she will, but she must not spread her system over the world that has outgrown it. Feudalism plus science, thirteenth century plus twentieth — this is the religion of the mistaken Germany that has linked itself with the Turk; that has, too, adopted the method of Mahomet: "The State has no conscience." The State can do no wrong." With the spirit of the fanatic she believes this gospel and that it is her duty to spread it by force. With poison gas that makes living a hell, with submarines that sneak through the seas to slyly murder noncombatants, with dirigibles that bombard men and women while they sleep, with a perfected system of terrorization that the modern world first heard of when German troops entered China, German feudaUsm is making war upon mankind. Let this old spirit of evil have its way, and no man will live in America without paying toll to it in manhood and in money. This spirit might demand Canada from a defeated, navyless England, and then our dream of peace on the north would be at an end. We would live as France has lived for 40 years, in haunting terror.