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SEPTEMBER $5, 1618.

Mr. Secretary, and Fellow Members of the Liberty Loan Amy*
This is the second convention of our members.

It is again ny duty to

remind you of the size of the undertaking entrusted to us by stating, as I did
at our last meeting, that hardly Z% of our members can be accommodated in this
The magnitude of the task of financing the creation and maintenance of
our military anqy is indicated by the size of this financial army.

But the im­

portance of the work must be measured by other standardsI
Success will be another battle won and failure will be a retreat.
These are not days, however, when American Armies are retreating.
Our experience in handling three loans has given us a better understand­
ing of the work;

has brought about a more harmonious and effective operation; and,

in the minds of us all, a better knowledge of the technic.

I shall not, therefore,

as at our last meeting, review in detail all of the various technical matters with
which we are now so well acquainted.
During the next four weeks, we are about to undertake the greatest trans­
action in the history of finance and it is important that certain general rules
which must govemrour work should be frankly discussed and understood.

These have

been deliberately adopted in this distridt after careful consideration, and, in
the opinion of experienced men, are best designed to bring success.
We believe that successful sales of bonds of the amount required must be
based upon a thorough understanding by the public of the war;
which we are fighting;

of the purposes for

and that this loan will be successful in proportion as the

patriot!an of the people is stirred and aroused.
Impetus must, therefore, be given to the campaign by publicity of the
highest order, designed to reach the mass of the people through every possible
.ggfenue. It

is upon this preparatory work of education that a campaign for voluntary

- 2subscriptions rests.
The selling organization, through various agencies, must undertake to
reach every individual and corporation, the methods varying according to the size
and character of the community.

In this city mazy methods must be pursued.


some communities an individual canvass of every resident is possible and fre­
quently proves most successful.

But, so long as i e employ publicity, and depend

upon the understanding, sympathy and enthusiasm of the public, we must confine
our campaign of solicitation to those methods which make the individual value
'the fact that he is a voluntary subscriber.

He must, however, be shown his

Eve.y person who subscribes ty free choise, for patriotic reasons, is a
better subscriber, more satisfied with his investment, and move contented to keep
his bonds than one who purchases bonds under duress and whose first impulse, once
the bonds are paid for, is to sell than.

Our program, therefore, contemplates an

intensive, dignified, and impressive publicity to reach every person, no-matter
what may be his means or what the country of his birth.
We must not, however, lower the standard of a dignified campaign by per­
mitting ourselves to indulge in sensational displays, extravagant statements or by
employing methods calculated to arouse ridicule or bring reproach upon the organ­

The enthusiasm of the menfcers of the organization should not lead them

to employ devices which will associate this serious undertaking with the methods of
a circus or of a lottery.
Performances of that character on the streets, in the theatres and in
public places can not expect a sympathetic reception from those who have relatives,
or who have loflb relatives, in the battles in France.

It is impostant to maintain

enthusiasm at the highest pitch, and, at the same time, to restrain it within the
limits required by the seriousness of the great enterprise in which this country
is engaged.

You are aware that bonds of previous loans, bearing the same rate of

Interest as those now to be sold, are selling at less than par in the market.
I shall repeat, with less fear of contradiction now than m e n I made the same
statement at our last meeting - that with over a million and a half of our Amer­
ican boys in the fighting line in France, whose victory depends upon the success
of these loans, the American people will not subject their patriotismj


resolution to support that any, to be measured by a rate of interest or by a
premium or discount on the braids of their Government.

But an important change

has just been made in the investment position of Liberty Bonds by Act of Congress,
to which I must refer in some detail.
Since the last bond sale, Congress has been asked and doubtless will
increase revenues from taxation from $4,000,000,000 to $8,000,000,000 a year.
As the income from all but the 5 l/2& bonds of the first issue is liable for
surtaxes and for war profits and excess profits taxes, an increase in those taxes,
naturally, reduces the net return on the bonds now to be issued.

Congress, has,

therefore, passed a law increasing tax exemptions, the provisions of which should
be brought to the attention of every intending subscriber, as well as to the
attention of every subscriber to the first three issues.
I shall read a summary of the act, which it is important that all should

All of the exemptions originally applying to the earlier issues, of

course, remain unchanged.

The interest on not exceeding 030,000 principal of bonds of the

Fourth Liberty Loan shall be exempt from graduated additional income taxes, commonly
known as surtaxes, and excess profits and war p ofits

taxes, now or hereafter


The interest received after January 1, 1918, on an amount of bonds

of the earlier loans, excepting the 3 l/2s of the first issue, the principal of
which doer not exceed 045,000 in the aggregate, shall be exempt from such taxes;
Proviled, however, that no owner of such bopds shall be entitled to such exemption
on an aggregate principal amount exceeding one and one-half times the principal

- 4amount of bonds of the Fourth Liberty Loan originally subscribed for and still
owned by him at the date of his tax return$

The old bonds to which the exemp­

tion applies are all of those outstanding, including those arising from conver­
sions, excepting, of course, the 3 1/2 % bonds of the first issue*

The exemptions provided in the bill are to continue during the

period of the war, and for two years after the date of the termination of the war,
as fixed by proclamation of the President.
To Summarize:

In addition to all tax exemptions now provided by law,

any original subscriber to bonds of the Fourth Liberty Loan will be exempt from
surtaxes and excess profits and war profit staxes on the inco es f o ; not exceed­
ing $30,000 principal of bonds of the Fourth loan, and, if he retains his bonds
may gain similar exemption on the income from one and one half times that amount
of the old bonds;

the exemption to continue for the period of the war and for

two years thereafter.
You will observe that the passage of this law will have the following
effect, provided it is thoroughly and widely understood:
First, as to a holder of the existing bonds who is now liable to income
surtax - He mny only enjoy the exemptions from taxation provided in this law in
case he purchases and retains bonds of the new issue in the proportion provided
by the law.

Therefore, eveiy holder of bonds of the second and third loan, and

of those received through conversions will find it absolutely essential, in order
to enjoy this exemption, that he shall buy and retain new bonds.
Next, as to an intending subscriber to the Fourth Loan - It is plainly
to his advantage, if he does not already own the necessary proportion, to purchase
such an amount of bonds of the old issues as will enable him to enjoy the maximum
tax exemption allowed.
One may suggest that it is not desirable for an intending subscriber to
purchase the old bonds, when he mi^it, in fact, be induced to purchase only the
new bonds.

It must be borne in mind, however, that the holder of the old bonds

- 5 -

who sells them does so in order to subscrihe to the new issue and thereby gain tax
exemption on the bonds which he still has left.
The effect of this new plan of exemption from taxation should, therefore,
as it becomes generally understood, bring about a large subscription from holders
of existing bonds.

It should, likewise, provide buyers of bonds of the old issues

which their holders may feel required to sell in order to subscribe fox the new
Advices have been sent to the chairmen of all committees throughout the
district that they will, upon request made to their district chairman, be furnished
with lists of subscribers to former loans.

These subscribers are so obviously

interested in the terms of this tax exemption that it is desirable for localcommittees to obtain the lists and bring the matter personally to the attention of each,
subscriber to former issues.
S0 few people rdad the details of statutes passed by Congress that the
effect of this most important modification of the tax provisions applying to
Liberty Bonds will not be fully felt, nor will the Government enjoy all of the
benefits which it should enjoy from the adoption of thi* new program unless it
is brought by you to the attention of everyone.

Too great emphasis can not be

given to the matter in connection with this campaign.
As in the case of former loans, a description of the terms of the Fourth
Loan, including a description of this tax exemption, will be furnished to all com­
mittees at an early date, together with tables illustrating the income value of
bonds of the Fourth Loan when Considered in connection with the tax exemption.
But we must not overlook the urgent injunction %hich has now been spread broadcast
for all owners of the Government's bonds to retain them.
Emphasis should be laid upon the necessity of making no sales of present
holdings of bonds unless it is imperative for the holder to do so in order to
secure the benefits of the tax exemptions now provided.

We can not expect to have

the bonds of the Government sell at their real value JLf large numbers of people

- 6 -

are induced, or even dragooned into buying them with the expectation of immedi­
ately selling them in the market.
The question is repeatedly asked, how may subscriptions be made by those
who are pressed to subscribe but who have not sufficient ready cash.

There is but

one answer:
Those nho must borrow money to make their purchase should do so in the
expectation of paying their loans out of funds accumulated by the practice of
rigid economy, rather than by selling their bonds.

The greatest difficulty now

encountered by our organization in selling bonds is caused by the failure of the
people of the country to practice thrift sufficiently.
I am confident that the only thing now needed is that everyone should
know apecifically and definitely what he is expect ed to do in this matter;


his patriotic duty is, and he will promptly do it.
Tie were told that the Government needed gasoline for war purposes and
that we should not drive automobiles on Sundays.

Hardly an automobile is to be

seen on the streets of New York City, or in the country, on Sundays.
was a fine exhibition of patriotism.

The response

But, after all, a Sunday drive is not essen­

tial to health or war efficiency, so we must not over-value the self denial.
We are told by Mr. Hoover that the economies practiced by the American
people released food supplies sufficient to meet the recent crisis abroad.
were told what to do and they did it.


We are now asked to economize in sugar, and*

the result will, doubtless, be a relief in the sugar shortage.
If we are told definitely and specifically what to doj
taLd to do is shown to be necessaryj

if what we are

and if it applies alike to rich and poor,

it will be done and the time has come to tell people definitely and to get it done.
I shall not burden you with the details of the mechanical operations
required to prepare and deliver the millions of bonds which are issued for these
huge loans.

Most of the delay and consequent inconvenience in delivering bonds in

the earlier loans was due to the universal demand fojp coupon bonds.

The machinery

- 7of the Treasury Department and of the reserve banks is now developed to meet an
enlarged demand for registered bonds, and for effecting prompt transfers of owner­
It will be a great econony to the Government, a saving of labor and
material, if those subscribing to the Fourth Loan are, generally, induced to take
registered, instead of coupon bonds.

The organization throughout the district

should ask subscribers to indicate on the subscription blanks that theyara willing
to accept registered bonds.

In thi3 form bond holders receive a greater protec­

tion against theft and loss than in the case of coupon bonds, and they avoid the
inconvenience of collecting coupons, as checks fcr the interest will be mailed
to them.
A modification of the honor flag plan has been adopted for tjhe next loan,.
of yfaich you have been duly advised.

The development of the honor flag seemed

to have had two effects in the course of the last bond sale> to which reference
is necessary.

In some cases it led committees in certain communities to relax

their efforts as soon as their quotas were completed.

This was a serious mistake.

It would result, if possible of exact application throughout the countiy, in no

Vfe must not set out simply to fill quotas, but to exceed them

by the largest possible margin and to continue selling bonds until the close of
the campaign.
Another development was the tendency to divert subscriptions to places
where they would not naturally be made.

A quota plan, as I stated at our last

meeting, is based upon the thoroughly sound principle that as the Government re­
ceives payment for bonds by transfers of bank balances from the credit of subscribers
to the credit of the Goverament.

Therefore, the minimum amount to be subscribed,

that is the Quota of each section or community, must be based upon bank resources.
It is desired that subscribers file their subscriptions where th^rbank
accounts are maintained, and out of which the bonds are to be paid for, and if the




subscriber has more than one account, that the subscriptions be divided in propor­
tion to the balances maintained in the respective accounts*

It is also desired

that the subscriptions of employes of industrial and other establishments shall be
made in the places where the men work and live*
Failure to observe these rules causes an undesirable shifting of funds
throughout the country and an unnecessary strain upon the mon^r market.

The local

pride of suburban communities, necessarily, results in considerable numbers of
subscriptions being ma-ie there by residents who cany their principal bank balances
in nearby cities.

Local pride and the enthusiasm of local organization should not,

however, result in tl piling up of huge sitoscriptions, of many times the local
quota, at the expense of the cities which are deprived of these subscriptions and
which are not able tdfill thsir quotas, so that possibly, inconsequence, the banks
must be called upon to subscribe for their own account.
Looking toward a greater and more efficient development of the two finan­
cial machines which have be sn created by the Treasury Department, Secretary McAdoo
has undertaken to bring about a closer relationship betwean the Liberty Loan and
the V ' r Savings Organizations throughout th« country. This is a new task which will
confront us when this loan is sold.

In the meantime, all brandaes of the two organ­

izations in this district have been asked to join hands in a groat partnership to
make the Liberty Loan a success.
I am hopeful that it will be possible to create in our district, through
the agency of these two existing organizations, the greatest and most efficient ?xny
for financing a Government in time of war that has evsr been created.

Its purpose

will be two in character - one to broaden the foundation for raising money for the
Government by developing organized savings, as the War Savings Organization is now
doing; - the other, to effect the sale of all forms of Goveranent Securities so that
these savings, as accumulated, are swept iito the Government1s treasury.
reach the rich and the poor - the corporationand the individual!

We must

- 9 -

In imagination I can picture the growth, of an irresistible mwament
under the influence of this arngr of workers which will capture public attention;
educate the people to a better understanding of what the Government expects them
to doj

and enable us, as required, to furnish even more funds than the Government

calls upon us to provide for war purposes.

The members of our organization have

been asked, and are expected, to accomplish things which before the war would have
seemed to be quite impossible.

They have exceeded expectations in what th#y have

The explanation is not hard to find, and should give us confidence in the
success of this next great effort.
in France!

We have sons, brothers, husbands in the army

Thirteen million Americans have just fcagietered for military service,

and many of them will soon be in training camps.

Our part in the wax- is to keep

them supplied with everything that they need to enable them to kill and capture
Germans - and to do it at once - and thoroughly.
be created, ships to transport them will be built;

The supplies for that arqy will
and that army will grow just

as rapidly as the resources of the country can be converted into ships and war

We muwt raise the money to pay the bills.
But our work dep nds upon the effect the new draft will have upon the

members of this organization who have registered for military service.


directions have been sent to the chairman of all committess in this district des­
cribing what they should do in this matter, and those directions have been pre­
pared by conformity with a general direction sent to us by Secretary IcAdoo.
It must be remembered that while commonly described as a draft law, the
statute is, in fact, entitled "The °elective Service Act."

The purpose of the act

is to insure that the men needed for military service are promptly available, but
equally important, that those needed in their present occupations shall be retained.
We have felt thit it was required of the members of our organization to claim, or
waive claim of exemption on personal grounds according to their own consciences.

We have also felt that it was our duty, as an organization, to see that

- 10 -

the question of exemption on occupational grounds fojp the organiation as a whole
was fairly and intelligently presented to the proper authorities.

That has been

done and a policy has been adopted which is designed to protect the integrity of an
organization essential to the prosecution of the rrar, and, at the same time, which
will not deprive the military branch of the Government of the services of thoae who
are needed, and can be spared, for the army and naiy.
I have referred at some length to the possible effect of the draft upon
our organization for the purpose of“emphasizing one thing in youi minds.

There is

but one American Anryl

A part of it is privileged to fight in France - Another,

and an essential part,

must work at homa.

Each depends upon the otherl

We are

of the hom« array.
Do you realize the significance of what is now taking place inFrance
and what these dollars which our army is raising are really doing?
wholly American Army is facing the Germqa frontierj

* he first

that frontier is opposite-

Metz stands on soil that was French until 1871.

My conception of the mis­

sion of the American Army in France is that of a victorious army marching through
Alsace-Lorraine, and never leaving until those provinces are French soil again.
I can not believe that the people of this country, much less our home
army of finance, will tolerate the return to Germany of any part of France, the
soil of which is made sacred to us with American blood and


soldiers' graves.

' T e the work of that army is accomplished (and you will have had a part
in it)

there will be illustrious American names as sacred to the memory of the

French as with us are the names of Rochambear and Lafayette.




(Insert in Govamor Strong's speech)

In the Third Liberty Loan, every banking town in this district (with
one exception) von the honor flag, and over 75% of the towns without banks won
honor flags.
As in the past loan, this flag will be awarded to those towns which sub­
scribe their full quotas. In addition, a blue star will be awarded for each over­
subscription of 50%.

Accompanying the honor flag will be a penant for those commu­

nities of which 25% of the population subscribe to bonds, and an additional penant
will be awarded for each additional 1(# of the population that sub scribes.
The industrial honor flag, used with great success in this city during
the Thijrd Loan, has been adopted for the whole country.

It will be awarded to those

organizations which secure subscriptions from 75% of their employes. If a larger
percentage subs rlbe, it will be indicated on the penant.
At the;suggestion of Mrs* Wilson, the names of communities showing the
largest oversubscriptions, and showing the largest percentage of population subscrib­
ing, will be given to new ships to be launched and to new tanks being built for the

Ten ships and ten banks have been assigned to this district.
governing the designation of the communities will shortly be published.

The rules