New-York tribune., 1920-03-10
U. 5. Treasury to
Cut Indebtedness
Over $500, 100000
Maturing Certificates and
War Finance Corporation
Notes To Be Retired; Be-
lieve New Issue Will Sell

The United States Treasury Is cx-
pected to reduce its indebtedness this
month by more than $500,OO0, 900, and
this contraction, some bankers believe,
will to some extent relieve the present
strain on the money market. The
Treasury's new offering, in unlimited
amount, of 4% per cent certificates, the
terms of which the Secretary of the
Treasury yesterday made public
through the Federal Reserve Bank here,
is not expected to exceed $400 000,0 900,
and may be closer to 100000 600.
To offset this new issue of one-year
certificates of indebtedness, the Treas
ury will retire, on March 15, approx
matcly $85,0OO,O0O of maturing certifi-
Gates, and it is expected that $125,-
100000 of notes of the War Finance
Corporation will be paid off on April l
next, their date Of maturity. This cut
ting down of the Treasury's borrow
ury believe, will add to the attractive
ness of the new Offering, and to some
extent counteract the adverse effect Of
the Az per cent rate, which, some
bankers maintain, is out of line with
the present money situation, particu-
larly since the Federal Reserve Bank
charges 5 per cent for advances and
rediscounts secured by certificates Of
indebtedness.
Expect Good Demand
Despite the fairly general preference
among bankers for per cent rate,
the Treasury anticipates no difficulty
in placing the certificates at the lower
rate. Officials at Washington, in argu-
ing for the lower rates, contend that
the certificates, with their tax exempt
and other privileges, are really worth
5A to ~ per cent to corporations.
Moreover, it developed at the confer
ence between members Of the former
Liberty Loan Committee. which is COM
posed of the principal bankers in the
city, and r. C. Leffingwell, First As
sistant Secretary of the Treasury, on
Monday, that the Treasury was opposed
to an open market for certificates of in
debtedness, pre- erring instead to place
them at par through the banks. The dis
tribution of the recent issues was con-
sidered eminently satisfactory by the
Treasury, it is understood, as three
quarters of those outstanding in this
district eventually got into the hands
of the investors.
Despite the attitude of the Treasury,
several leading investment houses have
for at least a fortnight been dealing
in certificates of indebtedness and
what was tantamount to an open mar
outstanding Az per cent certificates
sold below par-at 991a.
Among acceptance dealers Che view
was expressed that in backhanded
way the Treasury, in putting out Az
per cent certificates, was helping the
acceptance market, because acceptances
yield a much higher return.
According to the formal account at
the local Federal Reserve Bank, "the
Secretary Of the Treasury is announc-
ing to-day a new issue of United States
certificates of indebtedness acceptable
at their maturity March Is, 1921, in
payment Of Federal income and profits
taxes. The certificates are known as
Series 7 M-1921, are dated March Is,
1920, and bear interest at the rate Of
Az per cent.
Forms of Payment
"Qualified depositaries will be per-
mltted to make payment by book credit
TOR certificates allotted to them and
their customers, as usual. Treasury
certificates of indebtedness of any and
all series maturing on March Is, 1920,
and pursuant to an arrangement be-
tween the Treasury and the War FL
nance Corporation, bonds of that cor
poratlon maturing April 1, 1920, with
unmatured coupons attached, will be
accepted at par with an adjustment of
accrued interest in payment for any
certificates of the Series T M-1021
now offered, which shall be subscribed
for and allotted.
applications are now being received
by the Federal Reserve Bank Of New
YORK as fiscal agent of the United
States, but the right is reserved to
close the subscriptions at any time
without notice and to allot less than
the amount of certificates applied foro