New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1915-08-24
BOND ISSUE MAY
FOLLOW BREAK
WITH GERMANY
Wall Street Sees Loan,
Perhaps of Billion, if
War Comes.
LITTLE CHANCE NOW
FOR BRITISH LOAN
Situation Gives Treasury Excuse
to Wipe Out Deficit in Pro-
viding SineWs of War.

There was no doubt in the minds OF
Wall Streets leading bankers and bond
men yesterday that the international
complications arising from the torpe-
doing of the Arabic would result in
the long expected government bond
issue. As conditions now present them
selves, it was pointed out. the Treas
ury Department has an excellent ex-
cuse TO ask Congress to authorize
bonds that will not only be sufficient
in volume to wipe out the deficit of
over S35 100000 for the fiscal year end
ed June 30, but leave a sum large
enough for purposes OF national de-
fence, should the Arabic incident lead
to a breaking off of diplomatic rela-
tions with Germany and the possible
consequcnce-war.
The Treasury Department still has
available for issuance some $150,000,-
sentiment was general that this sum
would not be sufficient to meet the
needs of the country, in view of the
present standing of the army and navy.
II was thought that if Congress were
asked to act, it would be requested to
authorize at least $5OO,OOO 900, and pos
sibly $1,000, 100000.
As to the interest rate d special issue
of this character would carry, it was
said in banking and bond circles that
this would depend largely upon the exi-
gencies of the situation. Should war
measures be necessary, it was thought
that a 3 per cent issue would receive a
favorable reception; with war averted,
it was held that the government would
do we'll to increase the rate to per
cent, in view of the higher yields now
offered abroad and the competition
from domestic securities.
In any event, 1t was the opinion of
bond men that the standing of high
grade railroad, municipal and state
bonds would not be adversely affected
by a government issue. This was de-
clared to be due to the excess of idle
funds, not only in the vaults of the
banks and other big financial institu
tions, but also the large amount held
by private individuals awaiting invest
ment.
Taxation for great national purposes
is not begrudged by the people" said
a prominent banker, commenting on the
probability of a new government issue
Of bonds. "The country is willing to
pay for a better army and better
navy. What it complains of is the sort
of imitation of expenditure of which
the last Congress was guilty, in the
waste of public funds in the improve
ment of rivers and iarbors for the
benefit of small local interests"
The probability of an early issue Of
government bonds, bankers said, would
cause negotiations for the fotation Of
a British loan in this country to re-
main at a standstill. They said 1t
would be unwse to accept any pro-
posals from abroad while the conse-
quences of the sinking of the Arabic
were still uncertain.
United States government IS and 3s
yielded a quarter of a point yesterday
as result of the unsettling diplomatic
situation, to a parity with their low
est previous level of the year. The
government As were unchanged in
price. In connection with possible gov
ernment financing, it was also pointed
out that the Secretary of the Treasury
may on his own authority issue about
$500, 100000 one-year 3 per cent notes.
This might be done lending the calling
o. Congress, which would later pro-
vide permanent financing.