The United States Government asked for $2,000,000,000 on the First Liberty Loan in the Spring of 1917, and $3,034,000,000 was subscribed by over 4,000,000 subscribers. For the Second Loan, near the end of 1917, $3,000,000,000 was sought, and $4,617,532,300 was subscribed by 9,420,000 subscribers.

The Guaranty Trust Company of New York in a recent brochure reviewed the history of the various war loans of the United States, beginning with the Revolutionary loans, as follows:

When the patriots at Lexington "fired the shot heard 'round the world," the thirteen Colonies found themselves suddenly in the midst of war, but with practically no funds in their Treasuries. The Continental Congress was without power to raise money by taxation, and had to depend upon credit bills and requisitions drawn against the several Colonies. France was the first foreign country to come to the aid of struggling America, the King of France himself advancing us our first loan. All told, France's loan was $6,352,500; Holland loaned us $1,304,000; and Spain assisted us with $174,017. Our loan from France was repaid between 1791 and 1795 to the Revolutionary Government of France; the Holland loan during the same period in five annual installments, and the Spanish loan in 1792-3.

Our first domestic war loan of £6,000 was made in 1775, and the loan was taken at par. A year and a half later found Congress laboring under unusual difficulties. Boston and New York were held by the enemy, the patriot forces were retreating, and the people were as little inclined to submit to domestic taxation as they had formerly been to "taxation without representation." To raise funds even a lottery was attempted. In October, 1776, Congress authorized a second loan for $5,000,000. It was not a pronounced success, only $3,787,000 being raised in twelve months. In 1778 fourteen issues of paper money were authorized as the only way to meet the expenses of the army. By the end of the year 1779 Congress had issued $200,000,000 in paper money, while a like amount had been issued by the several States. In 1781, as a result of this financing and of the general situation, Continental bills of credit had fallen 99 per cent.

Then came Robert Morris, that genius of finance, who found ways to raise the money which assured the triumph of the American cause. By straining his personal credit, which was higher than that of the Government, he borrowed upon his own individual security on every hand. On one occasion he borrowed from the commander of the French fleet, securing the latter with his personal obligation. If Morris and other patriotic citizens had not rendered such assistance to the Government, some of the most important campaigns of the Revolutionary War would have been impossible. Following came the Bank of Pennsylvania, which issued its notes—in effect, loans—to provide rations and equipment for Washington's army at Valley Forge. These notes were secured by bills of exchange drawn against our envoys abroad, but it was never seriously intended that they should be presented for payment. The bank was a tremendous success in securing the money necessary to carry out its patriotic purposes, and was practically the first bank of issue in this country.

With the actual establishment of the United States and the adoption of the Constitution, Alexander Hamilton came forward with a funding scheme by which the various debts owed to foreign countries, to private creditors, and to the several States were combined. In 1791, on a specie basis, our total debt was $75,000,000. The paper dollar was practically valueless and the people were forced to give the Government adequate powers to raise money and to impose taxes. Between that date and 1812 thirteen tariff bills were passed to raise money to meet public expenditures and pay off the national debt.

THE WAR OF 1812.

For some time previous to the actual outbreak of the War of 1812 hostilities had been predicted. In a measure, this enabled Congress to prepare for it. And although the war did not begin until June of 1812, as early as March of that year a loan of $11,000,000, bearing 6 per cent. at par, to be paid off within 12 years from the beginning of 1813, was authorized. Of this, however, only $2,150,000 was issued, and all was redeemed by 1817. The next year a loan of $16,000,000 was authorized and subscribed. This was followed, in August, by a loan of $7,500,000 which sold at 88-1/4 per cent.

At the end of the war the total loans negotiated by the Government aggregated $88,000,000. The nation's public debt, as a result of this war, was increased to $127,334,933 in 1816. By 1835, either by redemptions or maturity, it was all paid.

MEXICAN WAR LOANS

The Mexican War net debt incurred by the United States was approximately $49,000,000 and was financed by loans in the form of Treasury notes and Government stock. The Treasury notes, under the act of 1846, totaled $7,687,800 and the stock $4,999,149. The latter paid 6 per cent. interest. By act of 1847 Treasury notes to the amount of $26,122,100 were issued, bearing interest in the discretion of the Secretary of the Treasury, reimbursable one and two years after date, and convertible into United States stock at 6 per cent. They were redeemable after Dec. 31, 1867. Economic developments following this war led to a period of extraordinary industrial prosperity which lasted for several years. A change in the fiscal policy of the Government, with overexpansion of industry, however, resulted in a panic in 1857 and a Treasury deficit in 1858. The debt contracted in consequence of the Mexican War was redeemed in full by 1874.

The situation had not improved to any great extent when Lincoln took office on March 4, 1861, and by mid-November of that year a panic was in full swing. The outbreak of the civil war found the Treasury empty and the financial machinery of the Government seriously disorganized. Public credit was low, the public mind was disturbed, and raising money was difficult. In 1862 the Legal Tender act was passed, authorizing an issue of $150,000,000 of legal-tender notes, and an issue of bonds in the amount of $500,000,000 was authorized.

This proved to be a most popular loan. The bonds were subject to redemption after five years and were payable in twenty years. They bore interest at 6 per cent., payable semi-annually, and were issued in denominations of $50, $100, $500, and $1,000. Through one agent, Jay Cooke, a genius at distribution, who employed 2,850 sub-agents and advertised extensively, this loan was placed directly with the people at par in currency. Altogether the aggregate of this loan was $514,771,600. Later in that year Congress authorized a second issue of Treasury notes in the amount of $150,000,000 at par, with interest at 6 per cent.; in January, 1863, a third issue of $100,000,000 was authorized, which was increased in March to $150,000,000, at 5 per cent. interest. These issues were referred to as the "one and two year issues of 1863."

DEFICIT IN 1862

In December, 1862, Congress had to face a deficit of $277,000,000 and unpaid requisitions amounting to $47,000,000. By the close of 1863 nearly $400,000,000 had been raised by bond sales. A further loan act, passed March 3, 1864, provided for an issue of $200,000,000 of 5 per cent. bonds known as "ten-fortys," but of this total only $73,337,000 was disposed of. Subsequently, on June 30, 1864, a great public loan of $200,000,000 was authorized. This was an issue of Treasury notes, payable at any time not exceeding three years, and bearing interest at 7-3/10 per cent. Notes amounting to $828,800,000 were sold. The aggregate of Government loans during the civil war footed up a total of $2,600,700,000; and on Sept. 1, 1865, the public debt closely approached $3,000,000,000, less than one-half of which was funded.

Civil war loans, with one exception, which sold at 89-3/10, were all placed at par in currency, subject to commissions ranging from an eighth to one per cent. to distributing bankers. The average interest nominally paid by the Government on its bonds during the war was slightly under 6 per cent. Owing to payment being made in currency, however, the rate was, in reality, much higher. With the conclusion of the war, the reduction of the public debt was undertaken, and it has continued with but two interruptions to date.

Heavy tax receipts for several years after the close of the war potentially enabled the Government to reduce its debt. Indeed, from 1866 to 1891, each year's ordinary receipts exceeded disbursements, and enabled the Government to lighten its financial burdens. In 1866 the decrease in the net debt was $120,395,408; in 1867, $127,884,952; in 1868, $27,297,798; in 1869, $48,081,540; in 1870, $101,601,917; in 1871, $84,175,888; in 1872, $97,213,538, and in 1873, $44,318,470.

Through refunding operations—in addition to bonds and short-time obligations redeemed with surplus revenues—the Government paid off, up to 1879, $535,000,000 bonds bearing interest at from 5 to 6 per cent. In this year the credit of the Government was on a 4 per cent. basis, and a year later on a 3-1/4 per cent. basis, against a maximum basis of 15-1/2 per cent. in 1864.

Between 1881 and 1887 the Government paid off, either with surplus revenues or by conversion, $618,000,000 of interest-bearing debt. In 1891 all bonds then redeemable were retired, and on July 1, 1893, the public debt amounted to less than one-third of the maximum outstanding in 1865. In 1900 the Government converted $445,900,000 bonds out of an aggregate of $839,000,000 convertible under the refunding act passed by Congress in that year. And further conversions in 1903, 1905, and 1907 brought the grand total up to $647,250,150—a result which earned for the Government a net annual saving in interest account of $16,551,037.

SPANISH WAR LOANS

The United States is a debt-paying nation. Hence, America's credit, despite occasional fluctuations, has steadily risen, and our national debt has sold on a lower income basis than that of any other nation in the world.

Following the sinking of the Maine in Havana Harbor, in 1898, Congress authorized an issue of $200,000,000 3 per cent. ten-twenty-year bonds. Of this aggregate $198,792,660 were sold by the Government at par. So popular was this loan, it was oversubscribed seven times. During the year 1898, following the allotment to the public, this issue sold at a premium, the price going to 107-3/4, and, during the next year, to 110-3/4. After the war ended, the Government, in accordance with its unvarying custom, began to pay off this debt; but, despite the Secretary of the Treasury's offer to buy these bonds, he succeeded in purchasing only about $20,000,000 of them.