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FINANCIAL FIGHT ON THE HOME FRONT Earl R. Bopp The Bridgeton Hotel Bridgeton, Nev Jersey Friday, April 9> 1943 FINANCIAL FIGHT ON THE HOME FRONT Definition of a consultant Objectives A. To win the war B. To share the burdens and hardships C. To win the peace Size of the financial task A. B. liho determines it? 1* The armed forces 2. Congress 3« The Treasury Budgetary requirements (See Chart 1) 1. Fiscal years m i 2. Expenditures Revenues.... 85 21 JÛL 109 Deficit 62 76 Public debt June 30, December June 30» June 30, 1942 31» 1942.. 1943 (est) 1944 (est) |72 108 135 211 billion billion billion billion - 2 - 3* C. Current expenditures - $7-3 billion a month How requirements are met 1. Taxation 2. Borrowing (December - Banks, ¿0$ Others^ bO%) 3* In England Heavier taxes Banks, 25$ Others, 15% I* Are the funds available? A. Real vs. financial aspects of the war (See Chart 2) B. Evidences of available funds 1* National income August, 1939 - $6 billion January, 1943 -$11 billion 2« Employment United States - + 66* since Aug. 1939 Pennsylvania - up 42% since Aug. 1939 3. Weekly wages - |25 to |43 since Aug. 1939 - 3 - 4. Savings of individuals JSâO 12£1 1942 4.3 11.8 10.3 U.A 28.9 9.3 Gross savings.. 16.1 24.7 38.2 Liquid........ Nonliquid..... 5. Demand deposits Increased 85 to 90% since 1939. Excess reserves at country banks are still large. 6. C. Pltul $9 billion since 1939 Plus ¿5 billion in 1942 Reasons for accumulation 1. Large public expenditures 2. Less goods to boy - living on coupons Threat of inflation A. Examples of unbalance (See Chart 2) B. Consequences 1. Individuals and institutions 2. Workers - homes and savings 3. Farmers - farms 4. Business - inventory losses 5. Cost of war 6» Morale sprite C. A- How to cope with inflation 1. Stretch supply of goods 2. Stabilize prices 3* Siphon off excess buying power a* Taxation b. Purchase of Government bonds The urgency of widespread bond ownership A. B. C. What happens if funds are borrowed from 1. Individuals, business concerns 2. Banks (See Chart 3) Personal reasons 1. Reserves - buying power if the war is won 2. Backing up our fighting men - they give their lives, we lend our money Community reasons for broad sales 1. Personal interest in fiscal affairs 2. Minimizes disagreements between bond holders and nonbond holders 3. Sense of stability and responsibility A» The habit of thrift Community assets - 5 - I. Organization - United States Treasury War Finance Committee A* Victory Fund and War Savings 1. B. Cooperative effort The basket of securities 1. Seven types of bonds and notes to meet needs of all types and classes of investors 2. The best investment in the world £ i-S tog ss $13,000,000,000 SECOND WAR LOAN DRIVE SUMMARY OF UNITED STATES GOVERNMENT SECURITIES ON SALE DURING APRIL 1943 UNITED STATES TREASURY WAR FINANCE COMMITTEE THIRD FEDERAL RESERVE DISTRICT War Savinas Staff Victory Fund Committee COMPUTATION OF ACCRUED INTEREST Accrued interest to be collected on subscriptions for $25,000 or more for any of the following issues should be computed on an actual basis, using the following decimals: 2 Yz Percent Treasury Bonds of 1964-69 — $0.06868 per day per $1,000 2 Percent Treasury Bonds of 1950-52 — $0.05435 per day per $1,000 Percent Treasury Certificates of Indebtedness of Series B-1944 — $0.02391 per day per $1,000 ITiird Federal Reserve District INFORMATION OR ORDER BLANK The following short form table, showing cents per day per $1,000, may be used in computing accrued erest to be collected on subscriptions for more than $1,000 and less than $25,000: Date April 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Day* 1 2 Sunday 4 5 6 7 8 9 Sunday 11 12 13 14 15 2% % Treasury Bonds of 1964-69 2% Treasury Bonds of 1950-52 Certificates of Indebtedness Series B-1944 $0.07 0.14 $0.05 0.10 $0.02 0.04 0.28 0.35 0.42 0.49 0.56 0.63 0.20 0.25 0.30 0.35 0.40 0.45 0.08 0.10 0.12 0.14 0.16 0.18 0.77 0.84 0.91 0.98 1.05 0.55 0.60 0.65 0.70 0.75 0.22 0.24 0.26 0.28 0.30 Interest on all subscriptions should be figured to the date funds will be available at the Federal Reserve Bank. N o accrued interest need be collected on individual subscriptions for $500 or $1,000, of the 2 Percent Treasury Bonds of 1950-52 or the 2 Percent Treasury Bonds of 1964-69. Normally, accrued interest should be calculated on the basis of making payment for the securities on the next business day following the day upon which the order is taken. Example —W hat amount o f accrued interest should be obtained with respect to $13,500 principal amount of 2}/2% Treasury Bonds of 1964-69, where the order is taken April 16, 1943 but will not reach the bank addressed until the next day? The interest factor, opposite April 17, in the column regarding the 2y3% bonds is $0.14 per $1,000. £ Multiply $0.14 by 13.5 and obtain $1,890 or $1.89, accrued interest to be obtained. Payment may be made on the day upon which the order is taken when the purchaser and subscribing bank so arrange, or may be made subject to several days delay when circumstances require. $13,000,000,000 SECOND WAR LOAN DRIVE 2y2% Treasury SUMMARY OF UNITED STATES GOVERNMENT SECURITIES ON SALE DURING APRIL, 1943, DRIVE 2% Treasury Bonds of 1950-52 - Bonds of 1964-69 Ctfs. of Indebtedness, Series B-1944 T ax Savings Notes Series C United States W ar Bonds, Series E United States Savings Bonds, Series F United States Savingi Bonds, Series G 100% 75% of maturity value 74% of maturity value 100% First day of month in which purchased 3 years from issue date Varies— 1.07% if held to maturity In inscribed form only $1,000 to $1,000,000 First day of month in which purchased 10 years from issue date Varies—2.90% if held to maturity First day of month in which purchased 12 years from issue date Varies— 2.53% if held to maturity First day of month in which purchased 12 years from issue date Registered form only Registered form only Registered form only $25 to $1,000 $25 to $10,000 $100 to $10,000 Continuously Continuously Continuously Continuously Upon order of Treasury Upon order of Treasury Upon order of Treasury Upon order of Treasury Application Application Application Application A few days after payment A few days after payment A few days after payment A few days after payment Yes Yes Yes Yes Issue price ............................................... $500 or $1,000 — 100%. Over $1,000— 100% and interest. $500 or $1,000 — 100%. Over $1,000 — 100% and interest. 100% and interest Dated ........................................................ April 15, 1943 April 15, 1943 April 15, 1943 Due June 15, 1969 Sept. 15, 1952 April 1, 1944 2 y2% 2% %% Denominations ....................................... Bearer or registered form $500 to $1,000,000 Books open ............................................. April 12, 1943 Books close ................................ ............. Upon order of Treasury Payment due o n ..................................... Subscription Delivery date ......................................... A few days after payment Taxable by Federal Government....... Eligible for subscription by individuals ........................................... Eligible for subscription by commercial b a n k s .............................. Acceptable in payment of Federal (income, estate or gift) taxes prior to maturity ......................................... Yes Bearer or registered form $500 to $1,000,000 Banks Apr. 28, 1943 Others Apr. 12, 1943 Banks Apr. 30, 1943 Others upon order of Treasury Banks--------Others on subscription Banks--------Others a few days after payment Yes $1,000 to $1,000,000 Banks Apr. 12, 1943 Others Apr. 12, 1943 Banks Apr. 14, 1943 Others upon order of Treasury Banks--------Others on subscription Banks--------Others a few days after payment Yes Yes Yes Yes Yes Yes Yes Yes N o3 Yes Yes Yes No No No Federal estate taxes only, on death of owner No No No No No Redeemable for cash prior to maturity ............................................... At Government option on or after June 15, ’64 at 100% and interest At Government’s option on or after Sept. 15, ’50 at 100% and interest No At holder’s option only, after 60 days from issue date At holder’s option only, after 6 months, on variable schedule on 1 month’s notice At holder’s option only, after 6 months, on variable schedule on 1 month’s notice Eligible for hypothecation................... Yes No No No No No Not more than $5000 maturity value in one calendar year3 No No No No .......................................................... Rate .......................................................... Registration ........................................... Eligible for deposit of public moneys Not before April 15, 1953 Salable in open m arket.......................... Yes Amount for which eligible investor m ay subscribe .................................... No limit (1) Total sales to commercial banks limited to 2 billion. Digitized(2)forAtFRASER purchase price only if commercial bank is holder for own account. Bearer form only Yes Yes Yes Yes Yes Yes Yes, during and after 2nd calendar month after purchase At holder’s option only, after 6 months, at 100% and interest on 1 month's notice2 For loans from banks only No No No limit1 No limit1 No limit (3) Additional purchases in co-ownership permitted in certain cases. (4) Upon death of owner redeemable at 100% after six months from issue date, if application for redemption is made within four months after decease. 2^2% Not more than $100,000 issue price of Series F and G together in one calendar year (5) May not be held by commercial banks for own account until April 15, 1953.
@FedFRASER