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bonus bearing such higher rate of interest and substantially identical with the bonds of such new series, except that the bonds issued upon such conversion are to be identical with the bonds of the present series as to maturity of principal and interest and terms of redemption.

APPLICATIONS.

The agencies designated by the Secretary of the Treasury to receive applications for the bonds now offered are the Treasury Department in Washington, D. C., and the Federal reserve banks in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta (with branch at New Orleans), Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Said banks have been designated also as fiscal agents of the United States to collate applications and to give notices of the allotments which the Secretary of the Treasury will eventually make to subscribers and to issue interim certificates for payments made on allotted subscriptions.

Large numbers of national banks, State banks and trust companies, private bankers, express companies, newspapers, department stores, and other private corporations, firms, and organizations, have patriotically offered to receive and transmit applications for the Liberty loan without expense to the United States or to the applicants. The Secretary of the Treasury, appreciating the value of these offers, will have application blanks widely distributed throughout the country to these private institutions and also to the post offices and Subtreasuries. Individual subscribers may use these conveniences or may send their applications directly to the Treasury Department at Washington and to the Federal reserve banks. As the law prohibits the allowance or payment of commissions on subscriptions all those through whom applications are made render service as a patriotic duty without compensation.

All applications must be in the form prescribed by the Secretary of the Treasury and be accompanied by a payment of 2 per cent of the amount of bonds applied for. Applications must be for $50 or any multiple thereof, but any application for one $50 or $100 bond until further notice may be alloted at once and payment in full accepted against delivery of an interim certificate. Appli. cations must reach the Treasury Department or a Federal reserve bank not later than noon, June 15, 1917, the right being reserved by the Secretary of the Treasury to close the subscription on any earlier date.

ALLOTMENTS.

Allotments will be made as soon after June 15 as possible. The Secretary of the Treasury reserves the right to reject any subscriptions or to make allotment of part of the amount subscribed for, and to allot in full upon applications for smaller amounts of bonds even though it may be necessary to reduce allotments on applications for larger amounts should any such action be deemed by him to be in the public interest, and his decision in these respects will be final. In any case of the rejection of an application the accompanying payment of 2 per cent of the amount applied for will be returned. In case of partial allotment the 2 per cent payment will be retained and any excess applied upon the next installment. Upon allotment of bonds by the Secretary of the Treasury the subscriber will receive notice thereof signed by or on behalf of the Federal reserve bank of his district. Unless and until payment in full has been made further ‘payments must be made when and as below provided under penalty of forfeiture of any and all installments previously paid and of all right or interest in the bonds allotted.

PAYMENTS.

The dates for payment in installments are as follows:
Two per cent on application.
Eighteen per cent on June 28, 1917.
Twenty per cent on July 30, 1917.
Thirty per cent on August 15, 1917.
Thirty per cent on August 30, 1917.

It is strongly recommended that subscribers avail themselves of the assistance of their own banks and trust companies. In cases where they do not do so, subscribers should make payment, either in cash to the Treasury Department in Washington or one of the Federal reserve banks, or by bank draft, check, postoffice money order, or express company money order, made payable to the order of the Treasurer of the United States if the application is filed with the Treasury Department in Washington (thus: “ Treasurer of the United States, Liberty Loan Account”), or, if the application is filed elsewhere, made payable to the order of the Federal reserve bank of the district in which the application is filed (thus: “Federal Reserve Bank of

Liberty Loan Account"). All checks must be certified. United States certificates of indebtedness issued under the act of April 24, 1917, will be received at par and accrued interest to date of settlement in making payment in full or in installments.

Interim certificates for installment payments due on or after June 28 will be issued by or on behalf of the Federal reserve banks as fiscal agents of the United States, and delivered as far as practicable in accordance with written instructions given by subscribers. Upon payment of the installment due June 28, the notice of allotment must be surrendered, and upon payment of each subsequent installment the interim certificate must be presented to the Federal reserve bank which issued the certificate for notation thereon of the fact of such payment, or for exchange for a new certificate. After full payment such Certificates must be surrendered in exchange for the bonds when prepared.

Payments of installments must be made upon the dates above stated until full payment has been made. Payment in full may be made on and after allotment and before August 30, 1917, if two weeks' prior notice in writing of the intention to make such payment, stating the date upon which such payment will be made, shall have been filed with the Federal reserve bank of the district in which the subscriber will make payment; but such notice shall not be required in case of any allotment of not exceeding $10,000 bonds or when payment is to be made in Treasury certificates of indebtedness.

As the bonds will carry six months' interest payable December 15, 1917, interest accruing on the bonds allotted, from June 15, 1917, to the date of full and final payment, must be added to the last payment, credit being given for interest at the like rate upon the several installment payments as follows: As to 2 per cent of the amount of bonds allotted upon application, from June 15, 1917, and, as to subsequent installments duly paid, from the respective dates upon which payment thereof is required to be made as above provided. Tables showing the amount of accrued interest payable on August 30 in case payment is made in installments, and the amount of accrued interest payable upon various dates in case payment is made in full prior to August 30 as herein permitted, will be prepared and furnished through the Treasury Department in Washington and the Federal reserve banks.

Within the United States and its Territories and insular possessions, bonds when prepared will be delivered so far as practicable in accordance with the written intructions of the holders of the interim certificates upon surrender to the Treasury Department in Washington or to the Federal reserve bank which issued the certificate of interim certificates full paid or accompanied by payment of the final installment. The expense of delivery will be borne by the United States. Delivery of definitive bonds to holders of full-paid interim certificates will commence as soon as practicable after June 28.

Further details may be announced by the Secretary of the Treasury from time to time, information as to which, as well as forms for applications, may be obtained from the Treasury Department and any Subtreasury or Federal reserve bank.

W. G. MCADOO,

Secretary of the Treasury. Mr. GREEN. My question was really preliminary to another matter in the bill now before us. In the bill now before us the terms of conversion are not fixed at all, but are left for you to determine, subject, of course, to the approval of the President, etc. Now, what latitude do you deem necessary in that respect with reference to the conversion, or what modifications might be made or might become necessary over the provisions in the former bill?

Secretary McAdoO. Mr. Leffingwell, who is the special counsel in matters relating to these bond issues, has been generous enough to volunteer his services in connection with this work, and to him I committed the preparation of this part of it. He tells me that the language was designed to make a little more specific and clear what authority the Secretary has in the premises; and, as he construes it. it is no enlargement of the existing powers, but is rather a clarification of existing powers.

Mr. GREEN. I shall have to examine it again before I am able to agree with Mr. Leffingwell in that respect. I think it is an enlargement of the powers.

Secretary McAdoo. To what extent do you think it is an enlargement?

Mr. GREEN. The terms of conversion are not prescribed at all in the bill.

Secretary McADOO. They are not prescribed in the existing act.

Mr. GREEN. Oh, yes; they are to a certain extent in the other bill; but I do not want to take up any time with a discussion of that.

Secretary McAdoo. It did not seem to us to be any more than a clarification.

M GREEN. The question has been answered fully, and I thank you for it. Now, with reference to the exemption of the bonds from certain taxation, as I understand it, the only theory upon which bonds are exempted from taxation is that there is no gain to the Government, as it refers to the rate of interest. Now, without saying that that theory is correct--and I do not care whether you give any opinion about it or not-in this particular case we are obtaining money for the allies, and it seems to me that if the Government is not collecting taxes on these bonds, in this particular instance, at least, it must absolutely lose them. What rate of interest do you think the bonds should bear if they were subject to all taxes—to all income taxes?

Secretary McAdoo. I do not know. I have not figured that ont; and I think it would be very difficult to figure out just what additional interest we ought to allow for that; that is, for making the bonds subject to all taxation, or all Federal taxation.

Mr. GREEN. So you did not think it was practicable?

Secretary McAvoo. It depends upon several factors, among which the principal ones are these: It depends on the distribution of the bonds primarily. To many of the people the exemption is not worth much; that is, to the smallest holder of the bonds. In order to equalize that situation and give everybody an equal benefit, as far as it is practicable to do so, we lift the rate of interest and modify the extent of the exemption. That makes the bonds bear a more uniform rate for every class of purchasers. There is another thing about that: You can not finance these operations unless the broadest possible market is created for the Government bonds, and you can not get the broadest possible market for 3 per cent bonds, even with full exemption, by reason of the facts I have mentioned.

The support of every part of the country was essential before to sell these loans and I wish to repeat that I have never seen a finer spirit of cooperation in the United States than that exhibited by the bankers and every other class of American citizens.

The wealth of the country is now so widely distributed and the rates of interest vary so much over the country that we must adopt a rate which will have a uniform appeal throughout the country. Now that is the reason I think a 4 per cent bond with a modified exemption will more nearly reach the investing money of the country than the 3} per cent with full exemption.

Mr. GREEN. I think your argument is very sound in that respect. As I understand you, you do not think it is practical to issue two kinds of bonds, one subject to taxation and the other not subject to taxation.

Secretary McAdoo. I think it is practicable, but I think it would add very much to the difficulty of selling them and would require a larger amount of explanation. If you gentlemen will agree to take the stump with me to sell the next loan and help me to explain it to the people, I shall be willing to try it with you; but if you are just going to leave the load to the Secretary of the Treasury, I should rather you would not do it.

Mr. ĞREEN. Have you any special reason to give why England was so successful in marketing her bonds that were subject to taxation? I believe some 90 per cent of her last issue were subject to taxation.

Secretary McAdoo. Of course, her rate of interest was much higher than ours. It was about 5 per cent, was it not?

Mr. GARNER. Five and one-fourth per cent.

Secretary McAdoo. You can sell these bonds without Federal exemption if you make the rate high enough. We would then only have to consider what the rate ought to be without the exemption.

Mr. CAREw. Do you not think it would be a good thing to start now?

Secretary McAdoo. I should prefer not to start it now, because I do not think the public is well enough informed, and I think such radical changes might perhaps add very much to the difficulty of selling the next issue. And, by the way, we have got to get busy on that; in fact, we are busy on it now. This legislation is so vital that I am sorry it was not possible to bring it to your attention earlier, because I myself have not been able to make up my mind wholly as to what rate we should suggest for the new legislation.

I am afraid if we make too many changes now in the short time left-I mean, if we make the thing too fundamentally difficult-it will add to the difficulty and uncertainty of the next sale. We may gain enough experience in this next campaign to make it wise to consider the issuance of a bond subject to all Federal taxation; but at the moment I really think it is taking too much of a risk with what is ahead of us and I should much prefer to just go this far for this campaign.

Mr. GARNER. Mr. Secretary, the question is constantly being asked by Members of Congress and by citizens what we are doing with so much money that we are appropriating; and I want to make the suggestion that you assume the burden, if you will, and put in this record in some form a statement showing how much nioney we have appropriated for war purposes up to date, and, in a general way, the purposes for which it is used. Some gentlemen were talking to me yesterday and comparing the amount of money spent by foreign countries and the amount of money we have appropriated up to date for our own uses, and they asked me why it was it took so much more money for us than it did for foreign countries. I was not probably in possession of all the facts, but I gave them a general outline of whatever information I had. I think it would

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