In order to facilitate the necessary transfers of credit with the least possible disturbance to the money market and to accommodate subscribers by extending their payments over as great a period as possible, payments were permitted in five installments, as follows: Two per cent on subscription; 18 per cent on June 28, 1917; 20 per cent on July 30, 1917; 30 per cent on August 15, 1917; 30 per cent on August 30, 1917. The number of subscribers was so great that the facilities of the Bureau of Engraving and Printing were utterly inadequate to turn out the bonds promptly. Therefore interim certificates were furnished to the Federal reserve banks for delivery to subscribers as payments upon subscriptions were made. The number of these certificates issued aggregated 7,672,560-2,145,885 part-paid certificates and 5,526,675 full-paid certificates. These interim certificates were receipts by the Secretary of the Treasury for payments on allotted subscriptions, but were not valid until executed by a Federal reserve bank as fiscal agent of the United States. THE SECOND LIBERTY LOAN OF 1917. Because of the increased demands occasioned by the war and the financial needs of the countries with which we are making common cause, the Congress by the act approved September 24, 1917 (Exhibit C), authorized the Secretary of the Treasury to issue, in addition to the $2,000,000,000 of bonds sold under the act approved April 24, · 1917, bonds in the total sum of $7,538,945,460, bearing interest at a rate not to exceed 4 per cent per annum, convertible into bonds bearing interest at a higher rate than 4 per cent per annum if any subsequent series of bonds bearing a higher rate should be issued by the United States before the termination of the war between this country and the Imperial German Government. This act also repealed the authority to issue further bonds under the act approved April 24, In granting this new authority, the Congress also materially modified the tax-exemption feature of the bonds. The bonds issued under the act approved April 24, 1917, are exempt both as to principal and interest from all taxation, except estate or inheritance taxes imposed by authority of the United States or its possessions or by any State or local taxing authorities. The bonds issued under the act approved September 24, 1917, are exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any possession of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (b) graduated additional income taxes, commonly known as surtaxes, and excess profits and war profits, now or hereafter imposed by the United States upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount of bonds and certificates authorized by the act approved September 24, 1917, the principal of which does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation, are exempt from the taxation provided for in clause (b) above. This change in the tax-exemption feature was deemed essential in order that the bonds might be of the same value, as far as taxation is concerned, in the hands of all investors, and in order that they might make the widest possible appeal. With the levying of increased taxes to meet the war needs of the country, it was felt that to continue the issuance of tax-free bonds in large amounts would give to the very rich a means of escaping a large measure of taxation with no compensating advantage to the man of moderate or small means who invested in Government bonds. For this reason the new bonds were made subject to the super income taxes and excess profits taxes and the rate of interest was increased to 4 per cent. The result is that all investors in the bonds issued under this act will be placed on an equality of advantage. The second Liberty loan was formally offered to the public on October 1, 1917, through Treasury Department Circular No. 90 (Exhibit D). The amount of the loan was $3,000,000,000, and the Secretary of the Treasury reserved the right to allot additional bonds up to onehalf the amount of any oversubscription. The bonds were dated November 15, 1917, and bear interest at the rate of 4 per cent per annum from that date, payable semiannually on May 15 and November 15. They will mature November 15, 1942, but the issue may be redeemed at the option of the United States on or after November 15, 1927, in whole or in part, at par and accrued interest, on any interest day on six months' notice given in such manner as the Secretary of the Treasury shall prescribe. In accordance with the terms of the act it was provided that if a subsequent series of bonds bearing interest at a higher rate than 4 per cent per annum shall be issued by the United States before the termination of the war between the United States and the Imperial German Government, the holders of the bonds of the second Liberty loan shall have the privilege at their option of converting their bonds at par into bonds bearing such higher rate of interest. If the privilege of conversion so conferred, however, shall once arise and shall not be exercised within the period prescribed by the Secretary of the Treasury, then the privilege of conversion shall terminate and shall not arise again, though thereafter bonds may be issued bearing interest at a higher rate than 4 per cent per annum. In offering the second Liberty loan to the public the same form of organization was utilized; that is, the 12 Federal reserve banks, as fiscal agents of the Government, were the central agencies in their respective districts operating through the Liberty loan committees and in cooperation with patriotic organizations and citizens generally. The size of the issue, controlled as in the case of the first Liberty loan by the necessities of the situation, presented a colossal task, and it was necessary to arouse the interest of the people of the entire country in the largest possible degree to the needs of the Government. The patriotic assistance and cooperation of every available agency that performed such splendid service in the first campaign were placed at the disposal of the Government. I can not express in adequite terms the great credit that is due them for the great service they rendered. I made a trip across the country and back again in an effort to take the message of the Government's needs to every section. I visited the following cities and made public addresses in each: Cleveland, Toledo, Indianapolis, Chicago, Madison, Sioux City, Sioux Falls, Aberdeen, Butte, Spokane, Tacoma, Seattle, Portland, San Francisco, San Diego, Los Angeles, Salt Lake City, Denver, Colorado Springs, Dallas, Fort Worth, Little Rock, Memphis, Nashville, Atlanta, and Charlotte. I also had the privilege of speaking in many smaller cities and towns along the way and also at a number of the camps where our soldiers are being trained. The subscriptions to the second Liberty loan closed on October 27, 1917, and the issue was a phenomenal success. The total subscriptions amounted to $4,617,532,300-an oversubscription of $1,617,532,300, or approximately an oversubscription of 54 per cent of the amount offered. This was a more gratifying result even than the first Liberty loan. It is an immensely gratifying fact that the second loan was subscribed for by approximately 9,400,000 men and women of the country. Of this number, it is estimated that 9,306,000, or 99 per cent, subscribed in amounts ranging from $50 to $50,000, the aggregate of such subscriptions being $2,488,469,350. The fact that such number purchased bonds is significant of the widespread interest of the people in the purposes of the war and of their determined vast support of the Government in all measures required for its vigorous prosecution. In conformity with the original announcement, I accepted 50 per cent of the oversubscription, making the total issue $3,808,766,150. The following table shows the subscriptions and allotments by Federal reserve districts: Second Liberty loan subscriptions and allotments of subscriptions by Federal reserve districts. Subscrip- Allotment. Subscriptions. Allotment. Subscriptions. Allotment. 51,125, 050 13,419, 350 26,616,000 8, 236, 050 5,048, 100 20, 233, 550 5,338,000 7,147,850 6,347, 650 2,938, 350 11,415,000 $135, 135, 100 $78,868, 650 The percentage of oversubscription, by Federal reserve districts, was as follows: It is to the credit of the country that every Federal reserve district exceeded its quota of the $3,000,000,000 of bonds offered. The success of the second loan, like that of the first, was a distinct triumph for the people of the United States. It not only demonstrated their ability, patriotism, and resources, but augurs the certain success of any future loans that may be offered by the Government. This great loan would have been impossible without the loyal support and cooperation of the people of the country, but even that support could not have been secured except for the indefatigable, unselfish, and earnest work of hundreds of thousands of splendid men and women throughout the United States, who threw themselves into the task without reservation. I wish to record thanks to all these splendid volunteers and patriots, and particularly to the bankers of America; the Liberty loan organizations which were formed in every State, city, town, and community in the United States; the women of the country, who made a distinctive fight for the Liberty loan through their own organizations; the Boy Scouts and Girl Scouts; the newspapers and periodicals which gave, as in the first Liberty loan, the most effective, unselfish, and generous support, through their columns and otherwise; the press associations, the business houses, the various patriotic organizations, cooperative and fraternal societies, and other organizations throughout the length and breadth of the land which so generously and earnestly gave their services to the great cause. Thanks are due also to those employers who, in such large numbers, gave the fullest opportunity to their employees to subscribe to the loan upon terms commensurate with their ability to make the required payments. I should like to make special mention of the soldiers and sailors of America, who came forward with subscriptions amounting to |