The Birmingham age-herald., 1920-04-18
GOVERNMENT STOPS BUYING OWN BONDS Beneficial Effect on Market
 to Result, Says
 Houston
By Associated Press

Washington, April 17.-Government pur- chase of Liberty bonds in the open mar ket, except through operation of the Houston announced tonight. A ''bene- ficial effect on the market was expected to result, he said Other officials said the market .n government securities had already begun to right itself, and that bond quotations hereafter might be ex- pected to trend upward.
 Mir Houston explained that in con- tinuing the purchase of bonds under the 5 per cent purchasing bond, the govern- ment was increasing it's floating debt while decreasing its funded debt. He said that current requirements of the government were such that if the pur- chase of bonds were to continue. the treasury would have to issue more cer- tificat $ of indebtedness with which to buy them.
 The per cent bond purchasing ar rangement was planned by Congress to expire automatically one year afteer the termination of war, but the secretary Of the treasury was empowered to decide when tt had served the purpose of sta- Iiii2ing the bond market--the underly- ing reason for it's original enactment mt law.
 Mir Houstons decision, however was based largely on the fact that on July the 2zk per cent sinking fund. provided in the Victory loan act, becomes opera tive He said it was not his intention to treat the two funds as cumulative, but to end one with the beginning of the other. The approximate amount set aside by the treasury for use in the pe- riod between now and July l will be taken over by the war finance corpora tion which will make all purchase of bands for which funds are available un- til the expiration date.
 Hereafter such purchases as the treas rry may make for the bond purchase fund will he "occasiona' and not habit ual," MT. Houston said.
 The low levels to which bonds have fallen were attributed by MT. Houston to forced liquidation by heavy bond purchasers-large industrial and other corporations who have been under pres sure to :ind frn6s to finance their cur rent expenditure He added that this had come when it had been necessary for measures to be invoked which would con trol credit ard make hank loans both difficult and expensive
 70 announcement was mdue resdru- ing the amount of bonds retired through the per cent purchase fund. All bonds bought were obtained by the treasury at discount ranging from to per cent, thus saving the government both the interest for the life of the bonds. as well as the difference between their par value and the market quotation.
 T believe the time has come" Mir. Houston said when the disappearance of the government from the market, ex- cept as an occasional purchaser, will have beneficial effect upon the market for the bonds and notes. both by reduc- ing the treasury's current borrowings on treasury certificates of indebtedness and stimulating the interest of invest ment bankers and the public in the mar ket Tor Liberty and Victory securities. This offers unique opportunity to in- vestors, large and small the quotations for the bonds being extremely attractive to investing institutions as well as pri- vate investors