The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-06-08

WILLIAM A. DAY, president Of the
Equitable Life Assurance Society, is
undoubtedly right when he says that
the lending companies of the country
are loaded to the muzZle with Gov
eminent bonds. He might have added
that they are periodically but dan
gerously loaded. 1t is a bad thing for
the country when lending institutions
have their assets so tied up that they
cannot take care Of the legitimate
turing, building or merchandising. 1t
Is a bad thing for the institutions
themselves when a large and sudden
demand upon them can be met only
with liquid assets or with assets that
can be made liquid quickly and with
out excessive depreciation in the
process of marketing them.
But when Mr.. DAY refers to the
Secretary Of the Treasury as saying
that further Government loans were
near at hand there isn't much chance
that he meant popular loans put out
IN the drive fashion.
There Is no question that the Gov
eminent Is short Of ready money.
There is no question that the Govern
ment is going to continue to be short
of ready money. There could be no
better testimony on this score than
the very latest word Of the Govern
ment. uttered through the Federal
Reserve Bank. This urges everybody
10 buy current issues of tax GER
tifcates. Extracted from this cir
cular are couple Of phrases, our
own italics emphasizing the truth
about the Treasury's financial needs:
The demands upon the Treasury
to pay the various prior issues OF
certificates as they mature will be
met by the proceeds from the sales
OF Victory Liberty Loan notes and
from receipts OF income and profits
taxes. but the steady outldys Of the
Government require the issue Of oddi-
tional certificates Of Indebtedness
from time to time.
las peace returns and the burdens
OF financing the war lessons the Gov
ernment's needs will naturally be on
decreasing scale. During the in
term, however, phile the Treasury
Department still urgently requires
Immediate funds, the attention OF
prospective subscribers Is again d.
rected to these current issues OF
certificates Of indebtedness, &C.. &C."
In other words there is nothing
real coming to the Treasury out of all
the Victory notes recently subscribed.
There is nothing coming to the Treas
ury out of all the income taxes and
profits still due and payable in install
ments June. September and Deem
Der.
All these billions have already been
spent. Billions more are spending.
The Government is borrowing day by
day from the banks to pay its way.
New certificates of indebtedness
crowd into the banks as fast as the
old certificates OF Indebtedness nre
cancelled.
But the reckoning must come. The
Government can't go on paying these
notes with like notes. It has got to
face the music Of settlement on
sounder basis. There cannot be any
settlement on such basis without
checking Of the Governments squan-
der which still continues. There can
not be any settlement even then with
out an exchange Of long term notes or
bonds for short term notes-a re-
funding Of indebtedness which knocks
on the Treasury door every five min
utes into an Indebtedness which will
come around for payment at intervals
OF years.
These bonds, or long term notes,
will have to he issued by the Govern
ment as surely as the Government
Will have to pay it's bills. But It is
not likely that they will be offered
10 the public. as in the previous loans.
by the Government. The risk of fail
nre with such public Offering would
ne 100 great. The Government. like
a railroad or steel plant, will make
a bargain with the banks. Then the
nahks Will have to buckle down 70
the long slow, hard job Of distribut-
ing inc new issues gradually among
investors just as they would the so,
suri'ies OF an electric lighting COM
MssM